How To Merge Two Corporations

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A lot of times, in business practice, two corporations merge together. This can be quite beneficial for both sides. This article lists some of the basic steps to help in the process of merging two corporations together; more detailed information, however, is best learned through online business schools.

Only one of the two corporations will become the sole corporation (existing) and the other corporation will not exist anymore. More than likely, it will be the largest corporation that takes over. If a new corporation is being formed, that would be a consolidation, not a merger.

Two corporations will merge together for a few different reasons. Some of these are so that they can cut down on certain costs, the corporations as a team (made into one) may become more valuable if they merge together, the one that will not exist anymore may have been having some troubles, etc. Usually, it is so that the corporation can become more valuable.

One of the first decisions that will need to be made is to decide which one of the corporations will be left as the head of the two combined? This includes all liabilities to the new corporation, meaning that the head of the new corporation holds power over all of it, assets, shares, etc.

Any property (assets) owned by each corporation will go into the new existing corporation, combined.

If there were any instances of trouble with the corporation that will no longer exist, the new corporation has to deal with these issues as if they were its own.

There will still be shareholders and/or the board of directors, and the clerk.

The Articles of Incorporation that was filed when the existing corporation was incorporated needs to be amended. This form was filed to choose the name of the company, its clerk, board of directors, and/or shareholders, what types of services the business would offer, and things like that. The main reason an Articles of Incorporation is filed is to make sure that the chosen business name is not like one that another company has.

Chapter 13 of the MBCA will be helpful in deciding what to do with any other property, shares, etc., and how it is converted to cash into the new corporation.

If you have further legal questions about this, any business attorney should be able to answer your questions or you can enroll in online business classes to get additional information. Your state office can answer other questions about what other paperwork needs to be done.


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