Corporate Sale of Substantially All Assets Approval Requirements in Delaware

At a glance

Requirements one by one

Section 271 uses an all-or-substantially-all trigger without a course qualifier

8 Del. C. § 271(a) covers a sale, lease, or exchange of all or substantially all corporate property and assets, including goodwill and franchises. The statute does not replace that qualitative phrase with a percentage, an ordinary-course exception, or a significant-continuing-business test.

For this section, subsidiary property and assets count as corporate property and assets. A subsidiary is any entity wholly owned and controlled directly or indirectly, including the listed corporate, partnership, limited-liability, and statutory-trust forms. The statute states no separate investment-holding rule.

The board chooses terms and holders authorize the transaction

The board acts at a meeting on terms, conditions, and consideration it deems expedient and in the corporation's best interests. Consideration may be money or other property, including another corporation's stock or other securities. Section 271 states no statutory agreement, filing, recommendation, nonrecommendation, or conditioning procedure.

Stockholders authorize through a resolution adopted by a majority of all outstanding stock entitled to vote. 8 Del. C. § 102(b)(4) permits the certificate to require a larger total, class, or series vote. Section 271 itself adds no separate class or series vote.

Meeting notice and written consent use different mechanics

Section 271(a) requires at least 20 days' meeting notice stating that the asset- sale resolution will be considered. Read with 8 Del. C. § 222(a)-(b), notice goes to stockholders entitled to vote. Section 271 adds no notice to nonvoters or required transaction description, terms, conditions, or consideration.

Unless the certificate provides otherwise, 8 Del. C. § 228(a), (c), (e) permits meeting-equivalent written or electronic consent without prior notice, delivered within 60 days. A less-than-unanimous action requires prompt notice to eligible nonconsenters.

Subsidiary and secured-collateral routes can remove the vote

Under § 271(c), no stockholder resolution is ordinarily required for a sale, lease, or exchange to a wholly owned and controlled subsidiary. The certificate may provide otherwise.

Under 8 Del. C. § 272(a), a mortgage or pledge does not ordinarily need holder authorization. Subsection (b) separately removes the § 271 vote when a secured party exercises legal rights against collateral, or when the board approves an alternative disposition that reduces or eliminates secured obligations, the property value is no greater than those obligations, and governing law does not prohibit it.

For certificate provisions first effective on or after August 1, 2023, a generic asset-sale vote clause does not reach the subsection (b) route unless it says so expressly. Section 271 states no ordinary-course, distribution, or dissolution exclusion.

The board may abandon, and the collateral rule preserves claims

After holder authorization, § 271(b) lets the board abandon without further stockholder action, subject to third-party rights under related contracts.

Section 272(c) can preserve a completed alternative collateral disposition for a transferee that provided value and acted in good faith even if the value proviso was missed. That protection does not apply to a preconsummation injunction and does not eliminate monetary liability for a fiduciary-duty claim.

Appraisal exists only if the certificate adds it

Under 8 Del. C. § 262(b)-(c), an ordinary § 271 transaction is not in the automatic appraisal list, but the certificate may grant appraisal for a sale of all or substantially all corporate assets. If it does, the section 262 procedure applies as nearly as practicable. Section 271 itself states no appraisal notice.

What trips people up

• The statute has no ordinary-course exception. Section 271 asks whether the transaction is a sale, lease, or exchange of all or substantially all property and assets, not whether it falls outside the ordinary course.
• A subsidiary transfer and subsidiary look-through are paired. Subsidiary assets count toward the parent's trigger, while a transfer to a wholly owned and controlled subsidiary ordinarily avoids the holder resolution.
• The secured-collateral exception has conditions. A board-arranged alternative disposition requires the liability reduction, value, and governing-law elements in § 272(b)(2).

Common questions

Must nonvoting stockholders receive the section 271 meeting notice?

The current statutes do not impose that requirement. Section 222 sends meeting notice to holders entitled to vote, and § 271 adds the 20-day interval and resolution statement without adding nonvoters.

Does section 271 require a filing with the Secretary of State?

No filing step appears in §§ 271-272. Other transaction, property, secured- creditor, regulatory, or dissolution law may independently require one.

Can stockholders demand appraisal automatically?

Not for an ordinary § 271 asset sale. Section 262(c) allows the certificate to create that right, so the certificate and complete transaction record must be checked.

Statutes and sources

• 8 Del. C. §§ 271-272 — all-or-substantially-all trigger, subsidiary treatment, board and holder action, notice, abandonment, mortgages, pledges, and secured-collateral dispositions. Official Subchapter X text, accessed September 5, 2026.
• 8 Del. C. §§ 102(b)(4), 222, and 228 — certificate supermajority, meeting notice recipients, and written consent. Official Subchapter I text and official Subchapter VII text, accessed September 5, 2026.
• 8 Del. C. § 262(b)-(c) — automatic-event boundary and optional certificate-based appraisal for an all-or- substantially-all asset sale. Official Subchapter IX text, accessed September 5, 2026.