Corporate Disposition of Assets: sale, lease, exchange

While the directors and officers of a corporation typically run its day-to-day operations, the shareholders — the owners — are generally responsible for their election and the direction of the corporation. It should come as no surprise, therefore, that major decisions involving the corporation often require shareholder approval. This extends to include when the corporation decides on a “sale, lease, or exchange or other disposition […] of all, or substantially all, the property and assets […] of a corporation, if not made in the usual and regular course of business. See Section 351.400, RSMo.
The statutory regime for this situation is addressed in Section 351.400 and is generally subject to the corporate bylaws. The first step is that the board of directors evaluates the potential disposition of assets. If the directors are in favor of the disposition, it may be adopted by special resolution and then submitted to a meeting of shareholders for final approval. The shareholders may then authorize the disposition and add terms and conditions. The affirmative vote of 2/3’s of the shares entitled to vote at the meeting is required for approval.
Notwithstanding shareholder approval, the directors may, in its discretion, abandon further action or approval by shareholders. This could simply be because of a change of heart or a change in the terms and conditions which makes it untenable in the directors’ eyes. This would seem to suggest that the directors have the final say in such a situation and can thus negate shareholder/owner wishes. However, recall that the shareholders elect the directors; accordingly, the “check” on director abuse in this instance would be a vote to remove by a majority of the shareholders.
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