- De Facto Non-Merger
A "de facto non-merger" occurs when a corporate transaction results in a merger, but when that merger was effectuated using non-merger methods such as "asset acquisitions" and "redemptions". "See" Rauch v. RCA Corp., 861 F.2d 29 (2nd Cir. 1988).
A shareholder might claim that a transaction was a "de facto non-merger" to argue that certain non-merger provisions in the company's articles of incorporation should apply (such as special "redemption" rights), especially when those provisions might be more favorable to the shareholder than default statutory merger protection provisions (such as "appraisal" rights).
Statutory protections generally provided for in statutory mergers include (a) board initiation and approval, (b) shareholder approval, (c) appraisal remedies.Related Links
De Facto Merger A de facto non-merger is when the merger takes the form of a merger but in substance it is a non-merger.It is done to avoid some of the liabilities and responsibilities that go along with an asset sale or other non merger transactions.A shareholder will argue de facto non merger and claim that although the transaction took the form of a merger in actually the corporation wished to effectuate a transaction other than a merger and therefore the corporations owes the shareholders the rights they hold under those non merger requirements
Wikimedia Foundation. 2010.
