Mergers are a way for businesses in Florida to grow, consolidate, or restructure. Whether two companies are combining their operations or a parent company is absorbing a subsidiary, a merger can bring legal and financial benefits. However, Florida law sets out specific requirements that must be followed for a merger to be legally valid. If these steps are overlooked or mishandled, it can create significant liability and complications down the road. As a Florida business attorney based in the St. Pete area, I help companies throughout Tampa Bay and St. Petersburg handle mergers with confidence by ensuring compliance with Florida statutes.
Under the Florida Business Corporation Act, the process for completing a merger between corporations involves shareholder votes, board approvals, and the filing of formal documents with the Florida Department of State. The Florida Business Corporation Act provides the framework for corporate mergers and outlines the legal steps that must be taken.
Understanding these legal requirements is very important whether you are acquiring another company or planning to merge with an affiliate or subsidiary.
Planning The Merger And Preparing A Plan Of Merger
The first step in any Florida business merger is developing a plan of merger, as required by Florida Statutes § 607.1101. This written plan must be approved by the board of directors of each corporation. The plan of merger outlines the terms of the merger, the name of the surviving entity, the manner in which shares will be exchanged or converted, and any changes to the articles of incorporation of the surviving company.
The plan of merger must also specify how liabilities and obligations will be handled, especially when the merged businesses have different structures or financial responsibilities. In some cases, additional details are needed for tax purposes or compliance with federal regulations.
Board Approval And Shareholder Consent
Once the plan of merger is in place, it must be formally adopted by the board of directors of each company involved, pursuant to Florida Statutes § 607.1103. After board approval, the plan usually requires a vote of the shareholders. Notice must be provided to all shareholders entitled to vote, and the vote must be conducted in accordance with the corporation’s bylaws and applicable Florida statutes.
In general, approval requires a majority of votes to be cast unless the company’s governing documents or shareholder agreements impose a higher standard. Shareholders who do not approve the merger may have dissenters’ rights under Florida Statutes § 607.1302. This right allows shareholders to request payment for the fair value of their shares.
Filing Articles Of Merger
After the plan is approved by both the board and shareholders, the next step is to file Articles of Merger with the Florida Department of State, Division of Corporations. This is required under Florida Statutes § 607.1105. The filing must include the names of the merging entities, the effective date of the merger, and a statement that the merger was approved according to law.
Once filed, the merger becomes legally effective on the date stated in the articles or immediately if no delayed effective date is specified. At that point, the surviving corporation assumes all assets, rights, and liabilities of the merged company under Florida Statutes § 607.1106.
Legal Effects Of A Merger
When a merger is complete, the surviving corporation automatically owns all property and is responsible for all debts and obligations of the merged corporation. No further action is required to transfer title or ownership. This legal effect is automatic and applies to all tangible and intangible assets.
In some mergers, there may be some practical issues that still need attention. Contracts may need to be reviewed to make sure that they remain valid after the merger. Business licenses may need updating, and banking or vendor relationships might need to be modified. Proper legal guidance during this process can help avoid problems that could arise after the merger is finalized.
Frequently Asked Questions About Business Mergers In Florida
What Is A Plan Of Merger And Why Is It Required In Florida?
A plan of merger is a written agreement that outlines the terms and structure of a proposed merger. It must include the names of the corporations involved, how shares will be exchanged, and any changes to the surviving corporation’s governance documents. Under Florida law, a plan of merger is required before the merger can be submitted for board and shareholder approval.
Do Shareholders Have To Approve A Business Merger In Florida?
Yes, shareholder approval is typically required unless the merger qualifies for an exemption under Florida Statutes § 607.1104. In most cases, shareholders entitled to vote must receive advance notice and a copy of the merger plan. A majority vote is required unless a higher standard is set in the company’s bylaws.
Can A Florida Corporation Merge With An Out-of-State Company?
Yes, a Florida corporation can merge with a company organized in another state or country. This is considered a foreign merger and is permitted under Florida Statutes § 607.1108. The plan of merger must comply with Florida law and the law of the other jurisdiction, and Articles of Merger must be filed with the Florida Department of State.
Do Mergers Trigger Tax Consequences In Florida?
While Florida does not impose a corporate income tax on certain pass-through entities like LLCs, mergers may still trigger federal tax consequences or state-level documentary stamp taxes. It’s essential to consult both legal and tax professionals to address potential liabilities based on the transaction structure.
Call Corey Szalai Law, PLLC, For Legal Help With Business Mergers In Florida
If you’re planning a business merger in Florida, I can help ensure your transaction is legally sound and compliant with state requirements. At Corey Szalai Law, PLLC, I work with businesses throughout Seminole, Tampa Bay, and St. Petersburg to manage every step of the merger process.
Contact our Seminole business merger attorney by calling 727-308-4300 to schedule a consultation. My law firm, Corey Szalai Law, PLLC, is located in Seminole, Florida, and I serve clients throughout the surrounding areas. Whether you are merging with a competitor, acquiring a subsidiary, or preparing for a strategic combination, I can help protect your interests under Florida law.