16-10a-1202 - Sale of property requiring shareholder approval. - Utah Statutes

16-10a-1202. Sale of property requiring shareholder approval.
(1) A corporation may sell, lease, exchange, or otherwise dispose of all, or substantiallyall, of its property, with or without the good will, otherwise than in the usual and regular courseof business, on the terms and conditions and for the consideration determined by the board ofdirectors, if the board of directors proposes and the shareholders approve the transaction. A sale,lease, exchange, or other disposition of all, or substantially all, of the property of a corporation,with or without the good will, other than in the usual and regular course of business and otherthan pursuant to a court order, in connection with its dissolution is subject to the requirements ofthis section, but a sale, lease, exchange, or other disposition of all, or substantially all, of theproperty of a corporation, with or without the good will, that is pursuant to a court order is notsubject to the requirements of this section.
(2) If a corporation is entitled to vote or otherwise consent, other than in the usual andregular course of its business, with respect to the sale, lease, exchange, or other disposition of all,or substantially all, of the property, with or without the good will, of another entity which itcontrols, and if the shares or other interests held by the corporation in the other entity constituteall, or substantially all, of the property of the corporation, then the corporation shall consent tothe transaction only if the board of directors proposes and the shareholders approve the consent.
(3) For a transaction described in Subsection (1) or a consent described in Subsection (2)to be authorized:
(a) the board of directors shall recommend the transaction or the consent to theshareholders unless the board of directors determines that because of conflict of interest or otherspecial circumstances it should make no recommendation and communicates the basis for itsdetermination to the shareholders with the submission of the proposed transaction; and
(b) the shareholders entitled to vote on the transaction or the consent shall approve thetransaction or the consent as provided in Subsections (5) and (6).
(4) The board of directors may condition the effectiveness of the transaction or theconsent on any basis.
(5) The corporation shall give notice in accordance with Section 16-10a-705 to eachshareholder entitled to vote on the transaction described in Subsection (1) or the consentdescribed in Subsection (2), of the shareholders' meeting at which the transaction or the consentwill be voted upon. The notice shall:
(a) state that the purpose, or one of the purposes, of the meeting is to consider:
(i) in the case of action pursuant to Subsection (1), the sale, lease, exchange, or otherdisposition of all, or substantially all, of the property of the corporation; or
(ii) in the case of action pursuant to Subsection (2), the corporation's consent to the sale,lease, exchange, or other disposition of all, or substantially all, of the property of another entity,which shall be identified in the notice, the shares or other interests of which held by thecorporation constitute all, or substantially all, of the property of the corporation; and
(b) contain or be accompanied by a description of the transaction, in the case of actionpursuant to Subsection (1), or by a description of the transaction underlying the consent, in thecase of action pursuant to Subsection (2).
(6) Unless this chapter, the articles of incorporation, the initial bylaws or the bylaws asamended pursuant to Section 16-10a-1021, or the board of directors acting pursuant toSubsection (4) requires a greater vote, the transaction described in Subsection (1) or the consentdescribed in Subsection (2) shall be approved by each voting group entitled to vote on the

transaction or the consent by a majority of all the votes entitled to be cast on the transaction orthe consent by that voting group.
(7) After a transaction described in Subsection (1) or a consent described in Subsection(2) is authorized, the transaction may be abandoned or the consent withheld or revoked by thecorporation's board of directors subject to any contractual rights or other limitation on theabandonment, withholding, or revocation, without further shareholder action.
(8) A transaction that constitutes a distribution is governed by Section 16-10a-640 andnot by this section.

Amended by Chapter 378, 2010 General Session