New Jersey Merger Checklist for Corporations
December 13, 2017
A Merger Checklist Can Help Mitigate The Stress & Margin for Error Involved in a Merger or Acquisition in New Jersey
Negotiating the terms of a merger or acquisition is often the most time-consuming and complex aspect of the transaction. As a result, businesses often overlook the details, such as verifying that they have satisfied their statutory obligations under New Jersey law.
Plan of Merger Requirements
Pursuant to N.J.S.A. 14A:10-1, any two or more domestic corporations, or any one or more domestic corporations and any one or more other business entities (including, among others, partnerships and limited liability companies), may merge into one of such corporations or other business entities pursuant to a plan of merger that contains the following information:
- The names of the corporations or other business entities proposing to merge, and the name of the corporation or other business entity into which they propose to merge, which will be the surviving corporation or surviving other business entity;
- The terms and conditions of the proposed merger, including a statement of any amendments to the certificate of incorporation of the surviving corporation to be affected by the merger, amendments that may be set forth in and affected by a restated certificate of incorporation filed as an additional document together with the certificate of merger;
- The manner and basis of converting the shares of each corporation (i) into shares, obligations, or other securities of the surviving corporation or of the surviving other business entity, or of any other corporation or other business entity, or (ii) in whole or in part, into cash or other property; and
- Any other provisions with respect to the proposed merger that the parties to the merger deemed necessary or desirable.
Once such board approval has been obtained, the plan of merger must be submitted to a vote at a meeting of shareholders. In most cases, the plan must be approved by a majority of the votes cast by the holders of shares of each corporation entitled to vote. This required shareholder vote may also be taken without a meeting, but only if (a) all shareholders consent thereto in writing or (b) all shareholders entitled to vote consent thereto in writing and 20-days prior written notice of the action to be taken is given to all other shareholders.
Certificate of Merger Requirements
Each corporation must execute a certificate of merger which must state the following:
- The name of the surviving or new corporation or new other business entity and the names of the merging corporations or other business entities;
- The plan of merger;
- The date or dates of approval by the shareholders of each corporation of the plan of merger;
- As to each corporation whose shareholders are entitled to vote, the number of shares entitled to vote thereon, and, if the shares of any class or series are entitled to vote thereon as a class, the designation and number of shares entitled to vote thereon of each class or series;
- As to each corporation whose shareholders are entitled to vote, the number of shares voted for and against the plan, respectively, and, if the shares of any class are entitled to vote as a class, the number of shares of each class or series voted for and against the plan, respectively; and
- If the merger is to become effective at a time subsequent to the date of filing with the New Jersey Division of Revenue and Business Services in the New Jersey Department of Treasury (the “New Jersey Filing Office”), the date when the merger is to become effective.
The executed original and a copy of the certificate of merger must then be filed with the New Jersey Filing Office. The merger will become effective upon the date of the filing or at a later time designated by the parties, but not to exceed 90 days after the date of filing.
Additional requirements must be met if the surviving corporation or other business entity is not a New Jersey corporation or other business entity and is not qualified to do business in New Jersey, including the requirement that a tax clearance certificate be obtained from the New Jersey Division of Revenue for each constituent corporation or other business entity that is registered in New Jersey.
If you have any questions or if you would like to discuss the matter further, please contact me, Charles Friedrich, at 201-806-3364.