Corporate Sale of Substantially All Assets Approval Requirements in California

At a glance

Requirements one by one

Classify the disposition before choosing the approval route

Cal. Corp. Code § 1001(a) covers a sale, lease, conveyance, exchange, transfer, or other disposition of all or substantially all corporate assets. The board must approve the principal terms. The outstanding shares also approve unless the transaction is in the corporation's usual and regular course of business.

California does not replace those qualitative words with a percentage of assets, income, or revenue, a significant-continuing-business formula, or a special rule for investment holding. This page therefore reports the trigger without deciding whether a transaction crosses it.

The route changes when the transaction is a reorganization under § 181 or a conversion. Section 1001 sends a reorganization to Chapter 12 except for its common-control rule and sends a conversion to Chapter 11.5.

The board approves principal terms, not a prescribed statutory plan

Section 1001(a) requires board approval of the principal terms but does not prescribe a separate statutory agreement, signature, or public filing. Under § 1001(c), the board may set the terms, conditions, and consideration it deems in the corporation's best interests; consideration may be money, securities, or other property.

The section states no general requirement that the board recommend approval, explain a conflict-based nonrecommendation, or condition submission. A covered interested-party proposal has a separate rule in § 1203(a): an unaffiliated valuation adviser supplies an affirmative written fairness opinion at the time specified for board approval, meeting notice, or consent solicitation. That requirement has record-holder and qualification exceptions and does not itself decide whether the transaction is fair.

Share approval uses an outstanding-share denominator

Cal. Corp. Code § 152 defines approval of the outstanding shares as an affirmative majority of all outstanding shares entitled to vote. It also requires a majority of every class or series entitled by the articles or the General Corporation Law to vote separately and preserves any greater proportion required by the articles or that law.

For a common-control transaction within § 1001(d), the principal terms instead need at least 90% of the disposing corporation's voting power. That branch does not apply when the stated nonredeemable-common-share or equity-security consideration exception applies, and § 1001(e) supplies a separate specified- regulator approval exception.

Meeting and consent routes have different notice mechanics

Under § 601(a), voting shareholders receive written meeting notice 10 to 60 days before the meeting, with a 30-day minimum for third-class mail. A special- meeting notice states the general nature of the business to be transacted. Section 1001 itself does not require notice to nonvoting shareholders or a full description of disposition terms and consideration.

Cal. Corp. Code § 603(a)-(c) supplies the relevant no-meeting mechanics. Unless the articles provide otherwise, subsection (a) permits written consent from the meeting-equivalent minimum number of votes. Subsection (b)(2) supplies prompt notice to nonconsenting voting holders for corporate action outside its specially listed preconsummation categories, while subsection (c) permits revocation only until the required consents have been filed with the corporate secretary.

If § 1203(a)'s interested-party conditions apply, the fairness opinion travels with the meeting notice or with the relevant unanimous or nonunanimous consent materials at the statute's specified time.

Approval may occur after the transaction, but contract rights survive

California's timing sentence is unusual: § 1001(a) permits outstanding-share approval before or after board approval and before or after the transaction. That statutory sequence does not decide what a commercial agreement, financing, escrow, consent, closing condition, or third-party right permits.

Section 1001(b) lets the board abandon the proposed transaction without another shareholder action despite prior outstanding-share approval. The statute expressly makes that authority subject to third-party contractual rights.

Appraisal depends on reorganization classification

An ordinary § 1001 disposition is not itself listed in § 1300(a)'s Chapter 13 cash-demand sentence. Cal. Corp. Code § 181(c), however, classifies an acquisition of all or substantially all assets as a sale-of-assets reorganization when the stated equity securities or inadequately secured debt securities maturing more than five years after consummation are used as consideration. Section 1001(a) sends that reorganization to Chapter 12.

Section 1300(a) then limits its appraisal route to specified reorganizations for which § 1201 requires outstanding-share approval. Transaction classification, holder eligibility, listing status, consideration, vote, demand, submission, valuation, and later procedure require their own analysis; this survey flags the boundary rather than deciding those issues.

What trips people up

• California has no 25% statutory safe harbor in § 1001. The section uses all-or-substantially-all assets and usual-and-regular-course language. A percentage test from another state's significant-continuing-activity statute is not California's text.
• The 90% rule is a related-party branch, not the ordinary vote. Ordinary approval follows § 152. Section 1001(d) applies its 90%-of-voting-power rule when the acquirer controls or is under common control with the disposer, subject to the stated exceptions.
• An asset-purchase agreement is not the statutory approval record. Section 1001 requires board and, when triggered, outstanding-share approval of the principal terms. A commercial agreement may be evidence of terms but does not itself establish the necessary corporate votes.

Common questions

Does an ordinary-course disposition require shareholder approval?

Not under § 1001(a)'s shareholder-approval clause. Board approval of the principal terms remains in the sentence, and this page does not decide whether a particular disposition is in the usual and regular course.

May shareholders approve after the board acts or after the transaction?

Yes as a matter of § 1001(a)'s internal statutory timing. The section permits approval before or after board approval and before or after the transaction, but that does not override third-party contracts or other applicable law.

Must California file the asset sale with the Secretary of State?

Section 1001 states no asset-sale filing requirement. A reorganization, conversion, dissolution, title transfer, license, lien, tax, or regulated- industry rule may create separate records or filings outside this section.

Statutes and sources

• Cal. Corp. Code § 1001. The quoted current text supplies the disposition scope, usual-and-regular-course boundary, board and outstanding-share approvals, flexible sequence, abandonment, consideration, common-control vote, and regulator exception. Official Legislative Counsel text (accessed September 5, 2026).
• Cal. Corp. Code §§ 152, 601, and 603. The quoted current text supplies the vote denominator, class/series and greater-vote treatment, meeting notice, and written-consent mechanics. Official Legislative Counsel text (accessed September 5, 2026).
• Cal. Corp. Code § 1203. The quoted current text supplies the covered interested-party fairness-opinion timing and exceptions. Official Legislative Counsel text (accessed September 5, 2026).
• Cal. Corp. Code §§ 181 and 1300. The quoted current text supplies the sale-of-assets-reorganization definition and conditional appraisal boundary. Official Legislative Counsel text (accessed September 5, 2026).