Question
CA Corporations Code question: I understand that under Ch. 10 sec. 1001(a), a corporation may sell or otherwise dispose of all / substantially all of
CA Corporations Code question:
I understand that under Ch. 10 sec. 1001(a), a corporation may sell or otherwise dispose of all / substantially all of its assets when the principal terms are approved by the board and (unless the transaction is in the regular course of business) approved by the outstanding shares..."
My question relates to the interpretation of the outstanding shares definition. Ch. 1 Section 152 of the CA Corporations Code specifies that "approved by the outstanding shares" means "approved by the affirmative vote of a majority of the outstanding shares entitled to vote. Such approval shall include the affirmative vote of a majority of the outstanding shares of each class or series entitled, by any provision of the articles or of this division,to vote as a class or series on the subject matter being voted upon and shall also include the affirmative vote of such greater proportion(including all) of the outstanding shares of any class or series if such greater proportion is required by the articles or this division"
Q1: My question is, if the Articles of a business say that only a certain class of shares can vote, does this mean that "approved by the outstanding shares" as it's defined above would just be that one class that the Articles say can vote? Referencing the bolded phrases in the definition above, I wanted to make sure that there isn't a provision under CA corporations' law that would entitle all classes to vote, regardless of what the Articles of the corporation say.
For example, Ch. 1 Section 117 of the CA corporations code states that "any requirement in this division for a vote of each class of outstanding shares mean such a vote regardless of limitations or restrictions upon the voting rights thereof, unless expressly limited to voting shares." I wanted to make sure something like this provision wouldn't apply to require all shares to vote for the sale of a corporation, even when the corporation's Articles specify that only one class of stock has voting rights.
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