A sale, lease, exchange or other disposition of all or substantially all the property and assets, with or without the good will, of a corporation, if not in the usual and regular course of its business, may be made upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property, real or personal, including shares of any other corporation, domestic or foreign, as may be authorized in the following manner:

1. A. the board of directors shall adopt a resolution recommending such sale, lease, exchange or other disposition and directing the submission thereof to a vote at a meeting of shareholders, which may be either an annual or a special meeting;
2. B. written notice shall be given to each shareholder of record, whether or not entitled to vote at the meeting, not less than twenty days before the meeting, in the manner provided in the Business Corporation Act for the giving of notice of meetings of shareholders and, whether the meeting is an annual or a special meeting, shall state that the purpose, or one of the purposes, is to consider the proposed sale, lease, exchange or other disposition;
3. C. at the meeting, the shareholders may authorize such sale, lease, exchange or other disposition and may fix, or may authorize the board of directors to fix, any or all of the terms and conditions thereof and the consideration to be received by the corporation therefor. The authorization shall require the affirmative vote of the holders of a majority of the shares of the corporation entitled to vote thereon, unless any class of shares is entitled to vote thereon as a class, in which event the authorization shall require the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote as a class thereon and of the total shares entitled to vote thereon; and
4. D. after the authorization by a vote of shareholders, the board of directors, nevertheless, in its discretion, may abandon such sale, lease, exchange or other disposition of assets, subject to the rights of third parties under any contracts relating thereto, without further action or approval by shareholders.

History: 1953 Comp., § 51-28-2, enacted by Laws 1967, ch. 81, § 76; 1983, ch. 304, § 59.

ANNOTATIONS

Compiler's notes. — This section is derived from Section 79 of the ABA Model Business Corporation Act.

Cross references. — For applicability of lowered voting requirements to existing corporations, see 53-18-6.1 NMSA 1978.

The 1983 amendment, effective June 17, 1983, substituted "a majority" for "two-thirds" in two places in the last sentence of Subsection C and added "and" at the end of Subsection C.

Scope of article. — In this jurisdiction the transfer of substantially all assets of a corporation not in the normal course of business is governed by the Business Corporation Act - sale of assets (53-15-1 to 53-15-4 NMSA 1978). Regents of N.M. Coll. of Agric. & Mech. Arts v. Academy of Aviation, Inc., 1971-NMSC-087, 83 N.M. 86, 488 P.2d 343.

Transfer to one other than stranger to corporation. — For a transfer to one other than a stranger to the corporation to be valid the statutory requirements must be strictly complied with. Regents of N.M. Coll. of Agric. & Mech. Arts v. Academy of Aviation, Inc., 1971-NMSC-087, 83 N.M. 86, 488 P.2d 343.

Failure to strictly comply does not invalidate where required shares consent. — A failure to adhere to statutory procedure will not invalidate a transaction with a stranger to a corporation where in fact the required two-thirds shares of the corporation entitled to vote have consented to the transaction. Regents of N.M. Coll. of Agric. & Mech. Arts v. Academy of Aviation, Inc., 1971-NMSC-087, 83 N.M. 86, 488 P.2d 343.

Law reviews. — Annual Survey of New Mexico Corporate Law, see 17 N.M.L. Rev. 253 (1987).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 19 Am. Jur. 2d Corporations §§ 2654 to 2679.

Constitutionality, construction, and effect of statutory or charter provisions relating to sale of all, or substantially all, of assets of corporation or division or distribution of the proceeds, 79 A.L.R. 624.

Applicability of statutes regulating sale of assets or property as affected by purpose or character of corporation, 9 A.L.R.2d 1306.

Who may assert invalidity of sale, mortgage, or other disposition of corporate property without approval of stockholders, 58 A.L.R.2d 784.

Duty of corporate directors to exercise "informed" judgment in recommending responses to merger or tender offers, 46 A.L.R.4th 887.

"Golden parachute" defense to hostile corporate takeover, 66 A.L.R.4th 138.

Lockup option defense to hostile corporate takeover, 66 A.L.R.4th 180.

19 C.J.S. Corporations §§ 792 to 810.