Iowa Code 504.1102 – Limitations on mergers by public benefit or religious corporations
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1. Without the prior approval of the district court, a public benefit or religious corporation may merge only with one of the following:
a. A public benefit or religious corporation.
b. A foreign corporation which would qualify under this chapter as a public benefit or religious corporation.
c. A wholly owned foreign or domestic business or mutual benefit corporation, provided the public benefit or religious corporation is the surviving corporation and continues to be a public benefit or religious corporation after the merger.
d. A business or mutual benefit corporation or an unincorporated entity, provided that all of the following apply where the public benefit or religious corporation is not the surviving entity in the merger:
(1) On or prior to the effective date of the merger, assets with a value equal to the greater of the fair market value of the net tangible and intangible assets, including goodwill, of the public benefit or religious corporation or the fair market value of the public benefit or religious corporation if it were to be operated as a business concern are transferred or conveyed to one or more persons who would have received its assets under section 504.1405, subsection 1, paragraphs “e” and “f”, had it dissolved.
(2) The business or mutual benefit corporation or unincorporated entity shall return, transfer, or convey any assets held by it upon condition requiring return, transfer, or conveyance, which condition occurs by reason of the merger, in accordance with such condition.
(3) The merger is approved by a majority of directors of the public benefit or religious corporation who are not and will not become members or shareholders in or officers, employees, agents, or consultants of the surviving entity.
Terms Used In Iowa Code 504.1102
- 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.
- Corporation: means a public benefit, mutual benefit, or religious corporation. See Iowa Code 504.141
- Directors: means individuals, designated in the articles or bylaws or elected by the incorporators, and their successors and individuals elected or appointed by any other name or title to act as members of the board. See Iowa Code 504.141
- Entity: includes a domestic or foreign business corporation; domestic or foreign nonprofit corporation; domestic or foreign unincorporated entity; estate; trust; state; the United States; governmental subdivision; and foreign government. See Iowa Code 504.141
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Foreign corporation: means a corporation organized under laws other than the laws of this state which would be a nonprofit corporation if formed under the laws of this state. See Iowa Code 504.141
- Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
- Member: means a person who on more than one occasion, pursuant to the provisions of a corporation's articles or bylaws, has a right to vote for the election of a director or directors of a corporation, irrespective of how a member is defined in the articles or bylaws of the corporation. See Iowa Code 504.141
- Membership: refers to the rights and obligations a member or members have pursuant to a corporation's articles, bylaws, and this chapter. See Iowa Code 504.141
- Mutual benefit corporation: means a domestic or foreign corporation that is required to be a mutual benefit corporation pursuant to section 504. See Iowa Code 504.141
- Proceeding: includes a civil suit and criminal, administrative, or investigatory actions. See Iowa Code 504.141
- Religious corporation: means a domestic or foreign corporation that engages in religious activity as one of the corporation's principal purposes. See Iowa Code 504.141
- Unincorporated entity: includes a general partnership, limited liability company, limited partnership, business or statutory trust, joint stock association, and unincorporated nonprofit association. See Iowa Code 504.141
2. Without the prior approval of the district court in a proceeding in which a guardian ad litem has been appointed to represent the interests of the corporation, a member of a public benefit or religious corporation shall not receive or keep anything as a result of a merger other than a membership in the surviving public benefit or religious corporation. The court shall approve the transaction if it is in the public interest.