Connecticut General Statutes 33-1166 – Sale or other disposition of assets leaving no significant continuing activity
(a) Unless the certificate of incorporation provides otherwise, a sale, lease, exchange or other disposition of assets, other than a disposition described in section 33-1165, requires approval of the corporation‘s members who are otherwise entitled to vote on the disposition, if any, only if the disposition would leave the corporation without a significant continuing activity. If a corporation retains an 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 activity.
Terms Used In Connecticut General Statutes 33-1166
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
(b) A disposition that requires approval of the members 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 members for their approval. The board of directors shall also transmit to the members a recommendation that the members 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 members the basis for that determination.
(c) The board of directors may condition its submission of a disposition to the members under subsection (b) of this section on any basis.
(d) If a disposition is to be approved by the members under subsection (a) of this section, and if the approval is to be given at a meeting, the corporation shall notify each member entitled to vote on the disposition, if any, of the meeting of members at which the disposition is to be submitted for approval. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the disposition and shall contain or be accompanied by a description of the disposition, including the terms and conditions thereof and the consideration to be received by the corporation therefor.
(e) Unless sections 33-1000 to 33-1290, inclusive, 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 classes of members, the disposition to be authorized must be approved by: (1) If no class of members is entitled to vote separately on the disposition as a class, at least two-thirds of the votes cast by the members entitled to vote thereon, and (2) if any class of members is entitled to vote on the disposition separately as a class, at least two-thirds of the votes cast by the members of each such class. Approval of the disposition by members may precede or follow authorization of the disposition by the board of directors and the taking of any necessary actions under subsection (b) of this section.
(f) After a disposition has been approved by the members 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 members, subject to any contractual rights of other parties to the disposition.
(g) A disposition of assets in the course of dissolution under sections 33-1170 to 33-1193, 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) If the corporation has no members, or no members entitled to vote thereon, a disposition described in this section shall be approved by the board of directors.