Similar to many aspects of corporate law, mergers are regulated at the state level. While these laws differ depending on the jurisdiction, several elements of the merger process are consistent nationwide. Generally, the board of directors for each company must first endorse a resolution adopting a merger plan that outlines the names of the companies involved, the proposed name of the merged entity, the method for converting shares from both entities, and any other legal provisions the corporations agree upon. Each company notifies its shareholders about a meeting to approve the merger. If the required number of shareholders approves the plan, the directors sign the documents and submit them to the state. Eventually, the secretary of state issues a merger certificate to authorize the newly formed corporation.
Every state has its own corporate statutes governing merger procedures. Additionally, state or federal agencies may choose to investigate the potential anticompetitive effects of a proposed merger. Due to the requirements and variables associated with merging, a company that intends to pursue a merger should consult with a lawyer well-versed in mergers and acquisitions law.
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