TITLE 7
Corporations, Associations, and Partnerships

CHAPTER 7-1.2
Rhode Island Business Corporation Act

PART 7-1.2-1101
Dispositions

SECTION 7-1.2-1102


§ 7-1.2-1102 Sale of assets other than in regular course of business.

A sale, lease, exchange, or other disposition of all, or substantially all, the property and assets, with or without the good will, of a corporation, if not in the usual and regular course of its business, may be made upon terms and conditions and for any consideration, which may consist in whole or in part of money or property, real or personal, including shares of any other corporation, domestic or foreign, as is authorized in the following manner:

(a) The board of directors' adoption of a resolution recommending the sale, lease, exchange, or other disposition, and directing the submission of the resolution to a vote at a meeting of shareholders, which may be either an annual or a special meeting.

(b) Written notice must be given to each shareholder, whether or not entitled to vote at the meeting, not less than twenty (20) days before the meeting, in the manner provided in this chapter for the giving of notice of meeting of shareholders. The notice must state whether the meeting is an annual or a special meeting, and that the purpose, or one of the purposes, is to consider the proposed sale, lease, exchange, or other disposition. A statement of the shareholder's right to dissent and a copy or summary of § 7-1.2-1202 must be included in or enclosed with the notice.

(c) At the meeting the shareholders may authorize the sale, lease, exchange, or other disposition and may fix, or may authorize the board of directors to fix, any or all of the terms and conditions of it and the consideration to be received by the corporation for it. The authorization requires the affirmative vote of the holders of a majority of the shares of the corporation entitled to vote on the authorization, unless any class of shares is entitled to vote on it as a class, pursuant to the articles of incorporation, in which event approval of the resolution also requires the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote as a class on the resolution.

(d) After the authorization by a vote of shareholders, the board of directors nevertheless, in its discretion, may abandon the sale, lease, exchange, or other disposition of assets, subject to the rights of third parties under any related contracts, without any further action or approval by shareholders.

(e) A transfer of all or substantially all of the property and assets of a corporation

(i) To one or more subsidiary corporations in which the transferor corporation owns shares possessing at least two-thirds (2/3) of the total combined voting power of all classes of shares entitled to vote at that time for election of directors, or

(ii) For cash, with or without an assumption of liabilities of the transferor corporation is governed by the provisions of § 7-1.2-1101 and not by this section. The sale, lease, exchange, or other disposition of all, or substantially all, the property and assets, with or without the good will, of one or more subsidiaries in which the parent corporation owns shares possessing two-thirds (2/3) or more of the total combined voting power of all classes of shares entitled at that time to vote for the election of directors is treated as a disposition of all, or substantially all, the property and assets of the parent corporation within the meaning of this section if the shares of the subsidiary or subsidiaries constitute all or substantially all the property and assets of the parent corporation.

History of Section.
(P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.)