When a company is incorporated, a sale or purchase an incorporated business may be achieved either by selling or buying the corporations assets or by selling or buying the stock owned by individual shareholders. The purchaser or buyer of a corporation may be one or more individuals, a partnership, another corporation, or some other business entity. When considering the purchase or sale of a corporation, certain corporate approvals and possibly government approvals may be required when another corporation is the purchaser or buyer. Close corporations usually have a shareholders agreement that may have restrictions on the purchase or sale and stock certificates with restrictions. Subchapter S corporations have certain restrictions under provisions of the Internal Revenue Code. In addition, the sale of a corporation may trigger rights under related agreements of the corporation.
The purchase and sale of a corporation can be achieved by the purchase and sale of the stock of the corporation or the purchase and sale of the assets of the corporation. Purchase and Sale of Shares of stock. When buying or selling the shares of stock, all or part of the corporation’s shares might be sold. A sale of all the corporation’s shares of stock at the same time to the same purchaser or purchasers constitutes a sale of the business. The buyer or buyers become the owner(s) of all the corporations assets and usually assume known as well as unknown liabilities of the business. Purchase and Sale of Assets. When buying or selling the assets of the corporation, the shareholders of the corporation may agree to sell some or all of the assets of the business and not their stock. If substantially all of the assets of the corporation are sold to a purchaser and the sale is not in the usual and regular course of business the sale requires approval of the board of directors and a minimum of two-thirds vote of the shareholders of the business, unless provided otherwise in the certificate of formation, in accordance with Tex. Bus. Orgs. Code 21.457. Additionally, minority shareholders may have the right to dissent to the sale and to force the selling corporation to value their shares and purchase them at the established value in accordance with Tex. Bus. Orgs. Code 10.354. A sale of a corporation’s assets generally subjects the purchaser to the corporations liabilities only if the purchaser specifically assumes the liabilities or as provided by statute Tex. Bus. Orgs. Code 10.254(b).