N.Y. Business Corporation Law § 913: Share exchanges

§ 913. Share exchanges.

(a) (1) Two domestic corporations may, as provided in this section,

participate in the consummation of a plan for binding share exchanges.

(2) Whenever used in this article:

(A) "Acquiring corporation" means a corporation that is participating

in a procedure pursuant to which such corporation is acquiring all of

the outstanding shares of one or more classes of a subject corporation.

(B) "Subject corporation" means a corporation that is participating in

a procedure pursuant to which all of the outstanding shares of one or

more classes of such corporation are being acquired by an acquiring

corporation.

(b) The board of the acquiring corporation and the board of the

subject corporation shall adopt a plan of exchange, setting forth:

(1) The name of the acquiring corporation and the name of the subject

corporation, and, if the name of either of them has been changed, the

name under which it was formed;

(2) As to the acquiring corporation and the subject corporation, the

designation and number of outstanding shares of each class and series,

specifying the classes and series entitled to vote and further

specifying each class and series, if any, entitled to vote as a class;

and, if the number of any such shares is subject to change prior to the

effective date of the exchange, the manner in which such change may

occur;

(3) The terms and conditions of the proposed exchange, including the

manner and basis of exchanging the shares to be acquired for shares,

bonds or other securities of the acquiring corporation, or the cash or

other consideration to be paid or delivered in exchange for such shares

to be acquired, or a combination thereof; and

(4) Such other provisions with respect to the proposed exchange as the

board considers necessary or desirable.

(c) The board of the subject corporation, upon adopting the plan of

exchange, shall submit such plan, except as provided in paragraph (g) of

this section, to a vote of shareholders in accordance with the

following:

(1) Notice of meeting shall be given to each shareholder of record, as

of the record date fixed pursuant to section 604 (Fixing record date),

whether or not entitled to vote. A copy of the plan of exchange or an

outline of the material features of the plan shall accompany such

notice.

(2) (A) The plan of exchange shall be adopted at a meeting of

shareholders by (i) for any corporation in existence on the effective

date of subclause (ii) of this clause, two-thirds of the votes of all

outstanding shares entitled to vote thereon and (ii) for any corporation

in existence on the effective date of this subclause the certificate of

incorporation of which expressly provides such and for any corporation

incorporated after the effective date of this subclause, a majority of

the votes of all outstanding shares entitled to vote thereon.

Notwithstanding any provision in the certificate of incorporation, the

holders of shares of a class or series of a class shall be entitled to

vote together and to vote as a separate class if both of the following

conditions are satisfied:

1. Such shares will be converted into shares of the acquiring

corporation, and

2. The certificate or articles of incorporation of the acquiring

corporation immediately after the share exchange would contain any

provision which is not contained in the certificate of incorporation of

the subject corporation and which, if contained in an amendment to the

certificate of incorporation of the subject corporation, would entitle

the holders of shares of such class or such one or more series to vote

and to vote as a separate class thereon pursuant to section 804 (Class

voting on amendment).

In such case, in addition to the authorization of the exchange by the

proportion of votes indicated above of all outstanding shares entitled

to vote thereon, the exchange shall be authorized by a majority of the

votes of all outstanding shares of the class entitled to vote as a

separate class. If any provision referred to in subclause 2 of this

clause (A) would affect the rights of the holders of shares of only one

or more series of any class but not the entire class, then only the

holders of those series whose rights would be affected shall together be

considered a separate class for purposes of this section.

Notwithstanding shareholder authorization and at any time prior to the

filing of the certificate of exchange, the plan of exchange may be

abandoned pursuant to a provision for such abandonment, if any,

contained in the plan of exchange.

(B) Any corporation may adopt an amendment of the certificate of

incorporation which provides that such plan of exchange shall be adopted

at a meeting of the shareholders by vote of a specified proportion of

the holders of outstanding shares, or class or series of shares,

entitled to vote thereon, provided that such proportion may not be less

than a majority and subject to the second sentence of clause (A) of

this subparagraph (2).

(d) After adoption of the plan of exchange by the board of the

acquiring corporation and the board of the subject corporation and by

the shareholders of the subject corporation entitled to vote thereon,

unless the exchange is abandoned in accordance with paragraph (c), a

certificate of exchange, entitled "Certificate of exchange of shares of

..............., subject corporation, for shares of .............,

acquiring corporation, or other consideration, under section 913 of the

Business Corporation Law", shall be signed on behalf of each corporation

and delivered to the department of state. It shall set forth:

(1) the statements required by subparagraphs (1) and (2) of paragraph

(b) of this section;

(2) the effective date of the exchange if other than the date of

filing of the certificate of exchange by the department of state;

(3) the date when the certificate of incorporation of each corporation

was filed by the department of state;

(4) the designation of the shares to be acquired by the acquiring

corporation and a statement of the consideration for such shares; and

(5) the manner in which the exchange was authorized with respect to

each corporation.

(e) Upon the filing of the certificate of exchange by the department

of state or on such date subsequent thereto, not to exceed thirty days,

as shall be set forth in such certificate, the exchange shall be

effected. When such exchange has been effected, ownership of the shares

to be acquired pursuant to the plan of exchange shall vest in the

acquiring corporation, whether or not the certificates for such shares

have been surrendered for exchange, and the acquiring corporation shall

be entitled to have new certificates registered in its name or at its

direction. Shareholders whose shares have been so acquired shall become

entitled to the shares, bonds or other securities of the acquiring

corporation, or the cash or other consideration, required to be paid or

delivered in exchange for such shares pursuant to the plan. Subject to

any terms of the plan regarding surrender of certificates theretofore

evidencing the shares so acquired and regarding whether such

certificates shall thereafter evidence securities of the acquiring

corporation, such certificates shall thereafter evidence only the right

to receive the consideration required to be paid or delivered in

exchange for such shares pursuant to the plan or, in the case of

dissenting shareholders, their rights under section 910 (Right of

shareholder to receive payment for shares upon merger or consolidation,

or sale, lease, exchange or other disposition of assets, or share

exchange) and section 623 (Procedure to enforce shareholder's right to

receive payment for shares).

(f) (1) A foreign corporation and a domestic corporation may

participate in a share exchange, but, if the subject corporation is a

foreign corporation, only if such exchange is permitted by the laws of

the jurisdiction under which such foreign corporation is incorporated.

With respect to such exchange, any reference in subparagraph (2) of

paragraph (a) of this section to a corporation shall, unless the context

otherwise requires, include both domestic and foreign corporations, and

the provisions of paragraphs (b), (c), (d) and (e) of this section shall

apply, except to the extent otherwise provided in this paragraph.

(2) With respect to procedure, including the requirement of

shareholder authorization, a domestic corporation shall comply with the

provisions of this chapter relating to share exchanges in which domestic

corporations are participating, and a foreign corporation shall comply

with the applicable provisions of the law of the jurisdiction under

which it is incorporated.

(3) If the subject corporation is a foreign corporation, the

certificate of exchange shall set forth, in addition to the matters

specified in paragraph (d), the jurisdiction and date of incorporation

of such corporation and a statement that the exchange is permitted by

the laws of the jurisdiction of such corporation and is in compliance

therewith.

(g) (1) Any corporation owning at least ninety percent of the

outstanding common shares, having full voting rights, of another

corporation may acquire by exchange the remainder of such outstanding

common shares, without the authorization of the shareholders of any such

corporation and with the effect provided for in paragraph (e) of this

section. The board of the acquiring corporation shall adopt a plan of

exchange, setting forth the matters specified in paragraph (b) of this

section. A copy of such plan of exchange or an outline of the material

features thereof shall be given, personally or by mail, to all holders

of shares of the subject corporation that are not owned by the acquiring

corporation, unless the giving of such copy or outline has been waived

by such holders.

(2) A certificate of exchange, entitled "Certificate of exchange of

shares of .........., subject corporation, for shares of ..........,

acquiring corporation, or other consideration, under paragraph (g) of

section 913 of the Business Corporation Law" and complying with the

provisions of paragraph (d) and, if applicable, subparagraph (3) of

paragraph (f) shall be signed, verified and delivered to the department

of state by the acquiring corporation, but not less than thirty days

after the giving of a copy or outline of the material features of the

plan of exchange to shareholders of the subject corporation, or at any

time after the waiving thereof by the holders of all the outstanding

shares of the subject corporation not owned by the acquiring

corporation.

(3) The right of exchange of shares granted by this paragraph to

certain corporations shall not preclude the exercise by such

corporations of any other right of exchange under this article.

(4) The procedure for the exchange of shares of a subject corporation

under this paragraph (g) of this section shall be available where either

the subject corporation or the acquiring corporation is a foreign

corporation, and, in case the subject corporation is a foreign

corporation, where such exchange is permitted by the laws of the

jurisdiction under which such foreign corporation is incorporated.

(h) This section does not limit the power of a domestic or foreign

corporation to acquire all or part of the shares of one or more classes

of another domestic or foreign corporation by means of a voluntary

exchange or otherwise.

(i) (1) A binding share exchange pursuant to this section shall

constitute a "business combination" pursuant to section nine hundred

twelve of this chapter (Requirements relating to certain business

combinations) if the subject corporation is a domestic corporation and

the acquiring corporation is an "interested shareholder" of the subject

corporation, as such term is defined in section nine hundred twelve of

this chapter.

(2) With respect to convertible securities and other securities

evidencing a right to acquire shares of a subject corporation, a binding

share exchange pursuant to this section shall have the same effect on

the rights of the holders of such securities as a merger of the subject

corporation.

(3) A binding share exchange pursuant to this section which is

effectuated on or after September first, nineteen hundred ninety-one is

intended to have the same effect as a "merger" in which the subject

corporation is a surviving corporation, within the meaning of any

provision of the certificate of incorporation, bylaws or other contract

or instrument by which the subject corporation was bound on September

first, nineteen hundred eighty-six, unless it is apparent on the face of

such instrument that the term "merger" was not intended to include a

binding share exchange.