What is a Merger
What is a Merger?

BUSINESS SERVICES


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What is a Merger?

A Merger is the combining of two or more companies into one company. The Merged companies are completely absorbed into and become part of the company into which they are Merged..

All states have laws that govern Mergers of companies. Most states have one set of Merger laws for corporations and another set of Merger laws for Limited Liability Companies (LLC). A Corporation can be Merged into a LLC or a LLC can be Merged into a Corporation. In these cases parts of the Merger laws for Corporations and the Merger laws for LLCs would apply. Mergers can also involve General Partnerships (GP), Limited Partnerships (LP) or Limited Liability Partnerships (LLP).

One of the first things that needs to be done for a Merger to happen is that the people responsible for making business decisions, for example the Board of Directors of a Corporation, must approve a resolution to adopt a formal Plan of Merger. Next the shareholders of a Corporation, members of a LLC, or partners of a GP, LP or LLP, must approve the formal Plan of Merger.

The Plan of Merger includes a description of the specific details of the proposed Merger. The Plan of Merger may include any legal provision to which the Merging companies agree. This includes, among other things, a description of how ownership interest will be transferred. For Corporations this is a description of exactly how any outstanding shares of stock will be converted or transferred.

Once a final Plan of Merger is approved by the majority of the shareholders, members or partners, documents have to be filed with the state agency responsible for administering the business services program in the state of the newly Merged company. This is usually the Secretary of State. Some states require that the formal Plan of Merger be filed along with the request for approval of the Merger. After the Merger is approved, the Secretary of State will then issue documents which legally recognize the newly Merged company.

Mergers, especially those that involve business entities from different states, can be complex and may expose the owners - shareholders, members or partners - to varying degrees of tax liability.
CORPORATE GLOSSARY
 
Administrative Dissolution
Agent for Service of Process
Apostille
Apportionment
Articles of Incorporation
Articles of Organization
Assumed Name
At Will LLC
Authorized Shares
B Corporation
Benefit Corporation
Board of Directors
Business Dissolution
Business Entity
Bylaws
Certificate of Existence
Certificate of Status
Certified Copy
Close Corporation
Common Stock
Conversion
Corporate Bylaws
Corporate Name Reservation
Corporate Stock
DBA
Disregarded Entity
Dividends
ESOP
Excise Tax
Federal Tax ID
Ficticious Name
Foreign Qualification
Franchise Tax
General Partnership
Good Standing Certificate
Incorporator
Involuntary Dissolution
IRS Form 966
ITIN
Limited Liability Company
Limited Partnership
Liquidation
LLC
LP
Majority Shareholder
Meetings
Merger
Nexus
Non-Stock Corporation
Nonprofit Corporation
Obligated Member LLC
Organizer
Paid-in Capital
Paid-in Surplus
Par Value
Personal Service Corporation
Preferred Stock
Privilege Tax
Professional Corporation
Professional Service
Proxy
Registered Agent
Registered Office
Reporting Requirements
Revocation
S Corporation
Series LLC
Service Mark
Shareholder
Sole Proprietor
Stated Capital
Statutory Agent
Stock Certificate
Term LLC
Trade Name
Trademark
Trust
Trustee
Winding Up
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