State Codes and Statutes
Statutes > Connecticut > Title33 > Chap601 > Sec33-831Sec. 33-831. Sale or other disposition of assets leaving no significant continuing business activity. (a) A sale, lease, exchange or other disposition of assets, other than a disposition described in section 33-830, requires approval of the corporation's shareholders if any such disposition would leave the corporation without a significant continuing business activity. If a corporation retains a business activity that represented at least twenty-five per cent of total assets at the end of the most recently completed fiscal year, and twenty-five per cent of either income from continuing operations before taxes or revenues from continuing operations for such fiscal year, for the corporation and each of its subsidiaries on a consolidated basis, the corporation will conclusively be deemed to have retained a significant continuing business activity.
(b) A disposition that requires approval of the shareholders under subsection (a) of this section shall be initiated by a resolution of the board of directors authorizing the disposition. After adoption of such a resolution, the board of directors shall submit the proposed disposition to the shareholders for their approval. The board of directors shall also transmit to the shareholders a recommendation that the shareholders approve the proposed disposition, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors shall transmit to the shareholders the basis for such determination.
(c) The board of directors may condition its submission of a disposition to the shareholders under subsection (b) of this section on any basis.
(d) If a disposition is required to be approved by the shareholders under subsection (a) of this section, and if the approval is to be given at a meeting, the corporation shall notify each shareholder, whether or not entitled to vote, of the meeting of shareholders at which the disposition is to be submitted for approval. The notice shall also state that the purpose, or one of the purposes, of the meeting is to consider the disposition and shall contain a description of the disposition, including the terms and conditions thereof and the consideration to be received by the corporation therefor.
(e) Unless the certificate of incorporation or the board of directors, acting pursuant to subsection (c) of this section, requires a greater vote or a vote by voting groups, and except as provided in subsection (i) of this section, the disposition to be authorized must be approved by a majority of all the votes entitled to be cast on the disposition.
(f) After a disposition has been approved by the shareholders under subsection (b) of this section, and at any time before the disposition has been consummated, the disposition may be abandoned by the corporation without action by the shareholders, subject to any contractual rights of other parties to the disposition.
(g) A disposition of assets in the course of dissolution under sections 33-880 to 33-903, inclusive, is not governed by this section.
(h) The assets of a direct or indirect consolidated subsidiary shall be deemed the assets of the parent corporation for the purposes of this section.
(i) Notwithstanding any provision of subsection (e) of this section to the contrary, a transaction of the type described in subsection (a) of this section of a corporation which was incorporated under the laws of this state, whether under chapter 599 of the general statutes, revision of 1958, revised to January 1, 1995, or any other general law or special act, prior to January 1, 1997, to be authorized by such corporation shall, unless the certificate of incorporation expressly provides otherwise, be approved by the affirmative vote of at least two-thirds of (1) the voting power of each voting group of such corporation entitled to vote thereon, and (2) the voting power of each class of stock of such corporation outstanding prior to January 1, 1997, whether or not otherwise entitled to vote thereon.
(P.A. 94-186, S. 140, 215; P.A. 96-271, S. 109, 110, 254; P.A. 97-246, S. 86, 99; P.A. 03-18, S. 26.)
History: P.A. 94-186 effective January 1, 1997; P.A. 96-271 replaced "articles" of incorporation with "certificate" of incorporation where appearing and amended Subsec. (h) to replace "January 1, 1996" with "January 1, 1997" and "each class of such corporation" with "each class of stock of such corporation", effective January 1, 1997; P.A. 97-246 amended Subsec. (d) to make a technical change, effective June 27, 1997; P.A. 03-18 amended Subsec. (a) by replacing former provisions with provisions re shareholder approval of disposition of assets that would leave the corporation without a significant continuing business activity, amended Subsec. (b) by replacing former provisions with provisions re action by the board of directors, amended Subsec. (c) by replacing provision re submission of proposed transaction with provision re submission of disposition to shareholders under Subsec. (b), amended Subsec. (d) by adding provision re shareholder approval of disposition at a meeting, replacing "proposed shareholders' meeting in accordance with section 33-699" with "meeting of shareholders at which the disposition is to be submitted for approval", and replacing former provision re shareholder notice of purpose of meeting with provision re notice to shareholders that purpose is to consider disposition, containing description of disposition, terms and conditions and consideration to be received, amended Subsec. (e) by replacing references to "transaction" with references to "disposition" and making a technical change, amended Subsec. (f) by replacing former provisions re abandoned transaction with provisions re abandonment of disposition without shareholder action at any time before disposition has been consummated, subject to contractual rights of other parties to the disposition, amended Subsec. (g) by replacing former provisions with provisions re disposition of assets in the course of dissolution, added new Subsec. (h) re assets of direct or indirect consolidated subsidiary, and redesignated existing Subsec. (h) as Subsec. (i), making technical changes therein, effective July 1, 2003.
Annotations to former section 33-18:
Purpose of statute was to change common law rule that sale of all the property of a solvent corporation was ultra vires. 116 C. 628. Sale of assets of bank in failing circumstances not impliedly forbidden by this section. Id. Where corporation files voluntary petition for reorganization, involving a transfer of its assets to a new corporation to continue the business, proceedings must be duly authorized by stockholders or directors. 123 C. 641. Statute does not apply to assets sold which are not essential to ordinary operation of company. 131 C. 14.
Section limited by its terms to situations wherein all the property of a corporation is to be disposed of. 12 CS 61.
Annotations to former section 33-372:
Cited. 178 C. 262.
Subsec. (c):
Cited. 8 CA 371.
