Corporate Sale of Substantially All Assets Approval Requirements in District of Columbia
At a glance
| Governing law, corporation, assets, and transaction scope | D.C. Business Corporation Act subch. X; ordinary domestic corporation. Covers sale, lease, exchange, or other non-exempt disposition of assets; direct/indirect consolidated-subsidiary assets count as parent assets (§§ 29-310.01 to 29-310.02) |
|---|---|
| Ordinary-course, significant-activity, and substantially-all trigger | Trigger is non-exempt disposition leaving corporation without significant continuing business activity, not express all/substantially-all formula. Usual/regular-course disposition of any/all assets exempt unless articles opt in (§§ 29-310.01(1), 29-310.02(a)) |
| Quantitative safe harbor, subsidiaries, and investment-holding tests | Conclusive retained-activity safe harbor: ≥25% prior-year total assets AND ≥25% of either continuing pretax income OR continuing revenue, corporation/subsidiaries consolidated. No reverse presumption, subsidiary- valuation, or investment-holding rule stated (§ 29-310.02(a), (h)) |
| Board resolution, recommendation, conflict exception, and conditioning | Board initiates by authorizing resolution, submits, and recommends; conflict/special-circumstances nonrecommendation requires its basis. Board may condition submission on any basis (§ 29-310.02(b)-(c)) |
| Shareholder meeting notice, nonvoting holders, terms, and consideration | Every voting/nonvoting holder gets 10-60-day meeting notice stating purpose and describing disposition, terms, conditions, consideration. Consent is unanimous unless articles allow meeting-equivalent votes; 60-day collection and 10-day post-action notices apply (§§ 29-305.04 to -305.05, 29-310.02(d)) |
| Vote denominator, classes/groups, articles, and higher thresholds | Majority of votes entitled is required quorum; with quorum, votes cast for must exceed against. Articles or board condition may require greater vote/ presence; no disposition-specific class/group vote stated (§§ 29-305.25, 29-310.02(c), (e)) |
| Ordinary-course, encumbrance, subsidiary, distribution, and dissolution exclusions | Unless articles opt in: usual-course assets, any-course encumbrance, wholly owned entities, and pro rata class/series distribution exempt. Dissolution dispositions follow subch. XII, not § 29-310.02 (§§ 29-310.01, 29-310.02(g)) |
| Agreement execution, closing, abandonment, and contract rights | Subchapter X states no statutory agreement execution, filing, amendment, or closing process. After holder approval and before consummation, corporation may abandon without holder action, subject to other parties' contract rights (§ 29-310.02(f)) |
| Appraisal/dissent notice and transaction effect | Entitled voter gets appraisal on consummated § 29-310.02 disposition, subject to market, consideration, and interested-transaction limits. Meeting/consent notice says rights are, are not, or may be available and includes subch. XI when applicable (§§ 29-311.02, 29-311.10) |
| Fiduciary, successor-liability, creditor, tax, antitrust, securities, and fact boundaries | Internal approval does not decide significant-activity or safe-harbor facts, fairness, fiduciary compliance, successor liability, fraudulent transfer, creditors, tax, securities, antitrust, employment, environmental, licensing, or other external law (§§ 29-310.01 to 29-310.02) |
Requirements one by one
The 25% pair is conclusive only when both parts are met
D.C. Code § 29-310.02(a) applies to a non-exempt disposition that would leave the corporation without significant continuing business activity. The corporation conclusively retains such activity if it keeps a business representing at least 25% of prior-year total assets and at least 25% of either pretax continuing income or continuing revenue. Each measure consolidates the corporation and its subsidiaries, and direct or indirect consolidated- subsidiary assets are parent assets.
The text does not make missing either percentage conclusive in the other direction. It states no separate subsidiary-valuation or investment-holding rule.
The board initiates, recommends, and may condition
The board adopts an authorizing resolution, submits the disposition, and ordinarily recommends approval. A conflict or special circumstance can support no recommendation if the board transmits its basis. It may condition submission on any basis.
Every holder receives terms, conditions, and consideration
Section 29-310.02(d) requires meeting notice to each voting and nonvoting holder. The notice states the purpose and describes the disposition, terms, conditions, and consideration. D.C. Code § 29-305.05(a) supplies the 10-to-60- day interval.
D.C. Code § 29-305.04 defaults no-meeting action to unanimous consent in a record. The articles may authorize the meeting-equivalent minimum, collected within 60 days. Nonvoters and nonconsenting voters then receive the meeting- equivalent materials no more than 10 days after sufficient consents or later tabulation.
A majority quorum uses a votes-cast decision rule
Section 29-310.02(e) requires a quorum of at least a majority of votes entitled to be cast. Under D.C. Code § 29-305.25, votes cast for then must exceed votes cast against. The articles or a board condition may require a greater vote or more votes present. Subchapter X adds no disposition-specific class or group vote.
Four exclusions and dissolution use different routes
D.C. Code § 29-310.01 removes four actions from holder approval unless the articles provide otherwise: a usual-and-regular-course disposition of any or all assets, an encumbrance in or outside that course, a transfer to wholly owned entities, and a pro rata asset distribution to one or more classes or series.
Section 29-310.02(g) places a disposition during dissolution under the separate dissolution subchapter.
Approval may be abandoned before consummation
After shareholder approval and before consummation, § 29-310.02(f) allows the corporation to abandon without another holder action, subject to other parties' contractual rights. Subchapter X states no statutory agreement execution, filing, amendment, or closing process.
Appraisal depends on holder, market, consideration, and interest facts
D.C. Code § 29-311.02 makes consummation of a § 29-310.02 disposition an appraisal trigger for a holder entitled to vote. The section's market exclusion can be displaced by specified consideration or an interested transaction, so class, market, transaction, and consideration facts matter.
D.C. Code § 29-311.10 requires meeting and consent notices to say whether the corporation concludes appraisal rights are, are not, or may be available. When rights are or may be available, eligible record holders also receive the appraisal subchapter.
What trips people up
- The safe harbor does not run backward. The 25%-plus-25% pair is conclusive when met, but missing either measure is not declared conclusive.
- The meeting vote is not a majority of all entitled votes. Entitled votes set the quorum; with quorum, votes cast for must exceed votes cast against.
- Consent notices follow the action. The articles-based consent route can proceed without prior notice, followed by the statutory nonvoter and nonconsenter notices.
Common questions
Are subsidiary assets included with the parent?
Yes, for direct and indirect consolidated subsidiaries. Section 29-310.02(h) treats their assets as parent assets for this analysis.
Must nonvoting holders receive disposition materials?
Yes. Section 29-310.02(d) sends every holder the meeting notice and its description of terms, conditions, and consideration.
Does Subchapter X require a public filing?
No filing step appears in §§ 29-310.01 to 29-310.02. Other transaction, property, regulatory, or dissolution law may independently require one.
Statutes and sources
- D.C. Code §§ 29-310.01 to 29-310.02 — exclusions, significant-activity trigger, conclusive 25% safe harbor, subsidiaries, board action, notice, vote, dissolution, and abandonment. Official section 29-310.01 text and official section 29-310.02 text, accessed September 5, 2026.
- D.C. Code §§ 29-305.04 to -305.05 and 29-305.25 — consent, meeting notice, and votes-cast approval. Official Business Corporation Act chapter, accessed September 5, 2026.
- D.C. Code §§ 29-311.02 and 29-311.10 — appraisal eligibility, limits, and notice. Official appraisal-right text and official appraisal-notice text, accessed September 5, 2026.
Source links
Every statute quoted above, linked, with the date we checked it.
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