Corporate Sale of Substantially All Assets Approval Requirements in Indiana
At a glance
| Governing law, corporation, assets, and transaction scope | Indiana Business Corporation Law, IC 23-1-41; domestic for-profit corporation under Article 1. Covers sale, lease, exchange, or other asset disposition outside § 23-1-41-1's usual-course, encumbrance, and wholly owned-recipient routes (§§ 23-1-20-5, 23-1-41-1 to -2) |
|---|---|
| Ordinary-course, significant-activity, and substantially-all trigger | Shareholder approval if non-§ 23-1-41-1 disposition would leave corporation without significant continuing business activity. Usual-course all/substantially-all disposition needs no vote unless articles require it; no separate substantially-all approval trigger (§ 23-1-41-1(1), -2(a)) |
| Quantitative safe harbor, subsidiaries, and investment-holding tests | Conclusive significant-activity retention if ≥25% of prior fiscal-year-end total assets and ≥25% of either pretax continuing-operations income or continuing-operations revenues for that year, corporation/subsidiaries on consolidated basis. Direct/indirect consolidated-subsidiary assets count as parent assets; no investment-holding rule (§ 23-1-41-2(a), (i)) |
| Board resolution, recommendation, conflict exception, and conditioning | Board initiates by resolution authorizing disposition, submits it, and recommends approval unless conflict/special circumstances justify no recommendation and basis is transmitted. Board may condition submission on any basis (§ 23-1-41-2(b)-(c)) |
| Shareholder meeting notice, nonvoting holders, terms, and consideration | Every shareholder, voting or not, gets 10-60-day meeting notice stating disposition purpose and describing disposition, terms, conditions, and consideration. Ordinary private corporation may use meeting-minimum written consent unless articles say otherwise; 60-day aggregation and ≤10-day postaction nonvoter/nonconsenter notices apply (§§ 23-1-29-4 to -5, 23-1-41-2(d)) |
| Vote denominator, classes/groups, articles, and higher thresholds | Meeting needs quorum of at least majority of votes entitled on disposition; with quorum, votes favoring must exceed votes opposing. Articles or board condition may require greater vote/presence; entitled voting groups act separately, but § 23-1-41-2 creates no automatic class/series group (§§ 23-1-30-6 to -8, 23-1-41-2(c), (e)) |
| Ordinary-course, encumbrance, subsidiary, distribution, and dissolution exclusions | Unless articles require approval, no vote for usual-course all/substantially-all disposition, encumbrance of any/all property, or transfer of any/all property to wholly owned corporation. Distribution follows IC 23-1-28; dissolution dispositions under listed chapters excluded (§§ 23-1-41-1, -2(g)-(h)) |
| Agreement execution, closing, abandonment, and contract rights | Chapter 41 prescribes no separate statutory agreement, signature, filing, or amendment process. After shareholder approval and before consummation, corporation may abandon without shareholder action, subject to other parties' contractual rights (§ 23-1-41-2(f)) |
| Appraisal/dissent notice and transaction effect | Voting holder may dissent from consummated outside-course sale/exchange of all/substantially-all property, including dissolution sale, except court- ordered or qualifying cash sale distributing net proceeds within 1 year; governing records/board may add rights. Federal covered securities excluded; preferred-share rights may be limited prospectively. Meeting notice flags rights (§§ 23-1-44-8, -10) |
| Fiduciary, successor-liability, creditor, tax, antitrust, securities, and fact boundaries | Chapter 41 supplies internal approval and abandonment rules, not a finding that facts fail/meet significant-activity or 25% tests or that disposition is fair, valid, enforceable, nonfraudulent, or compliant with fiduciary, successor-liability, creditor, tax, securities, antitrust, employment, environmental, licensing, or regulatory law (§ 23-1-41-2) |
Requirements one by one
Measure what remains after the disposition
Ind. Code § 23-1-41-2(a) requires shareholder approval when a disposition outside § 23-1-41-1 would leave the corporation without significant continuing business activity. It does not make “all or substantially all” the operative extraordinary-disposition trigger.
Indiana supplies a conclusive way to establish retained significant activity. The retained business must represent at least 25% of total assets at the end of the most recently completed fiscal year and at least 25% of either pretax income from continuing operations or revenue from continuing operations for that year. Each calculation uses the corporation and its subsidiaries on a consolidated basis.
Section 23-1-41-2(i) also treats the assets of a direct or indirect consolidated subsidiary as parent assets for all purposes of the section. The statute states no separate subsidiary valuation method or investment-holding rule.
Board initiation is a resolution, recommendation, and submission
Section 23-1-41-2(b)-(c) requires a board resolution authorizing the disposition before submission. The board transmits a recommendation unless conflicts of interest or other special circumstances justify no recommendation, in which case it transmits the basis for that determination.
The board may condition submission on any basis. Chapter 41 states no separate statutory agreement, signature, public filing, or amendment process for the asset disposition.
Meeting notice includes the economic terms
Section 23-1-41-2(d) requires notice to every shareholder, voting or nonvoting. The notice identifies the disposition as a meeting purpose and describes the disposition, including its terms, conditions, and consideration to be received.
Ind. Code § 23-1-29-5 sets the general meeting-notice interval at 10 to 60 days and adds date, time, place when applicable, and remote-communication information.
The meeting uses quorum plus a votes-cast comparison
Section 23-1-41-2(e) requires a quorum consisting of at least a majority of the votes entitled to be cast on the disposition unless the articles or a board condition requires a greater vote or greater number present. With quorum, § 23-1-30-6(c) approves ordinary action when votes favoring exceed votes opposing, unless the articles or Article 1 require a greater affirmative vote.
Ind. Code §§ 23-1-30-6 to -8 apply that rule separately to every entitled voting group and permit greater articles requirements. Section 23-1-41-2 itself creates no automatic class or series vote for an asset disposition.
A private corporation may use nonunanimous written consent
Under § 23-1-29-4(b), an ordinary private corporation may act by written consent of holders with the meeting-equivalent minimum unless its articles provide otherwise. The exclusion for a corporation with voting shares registered under Exchange Act § 12 is outside this survey's private-corporation scope.
Sufficient consents must be delivered within 60 days of the earliest signed consent. Nonvoting holders required to receive meeting notice and nonconsenting voting holders receive the meeting-equivalent materials within 10 days after sufficient consents arrive or an authorized tabulation finishes. Those notice requirements do not delay or invalidate the action, although a court may fashion a remedy for an adversely affected holder.
Distribution and dissolution are express exclusions
Ind. Code § 23-1-41-1 makes shareholder approval unnecessary unless the articles require it for a usual-course all-or-substantially-all disposition, an encumbrance of any or all property, or a transfer of any or all property to a corporation whose every share the transferor owns.
Section 23-1-41-2(g) sends a transaction constituting a distribution to IC 23-1-28. Subsection (h) excludes dispositions in the course of dissolution under its listed dissolution chapters.
Approval may be followed by preconsummation abandonment
After shareholder approval and before consummation, § 23-1-41-2(f) permits the corporation to abandon without further shareholder action. Other parties' contractual rights remain intact, so the statute does not decide agreement termination, damages, financing, or closing conditions.
Dissent rights use a narrower current trigger
Ind. Code § 23-1-44-8(a)(3) grants a voting holder dissent and fair-value payment rights on consummation of an outside-course sale or exchange of all or substantially all corporate property. It includes a sale in dissolution but excludes a court-ordered sale and a cash sale under a plan distributing all or substantially all net proceeds within one year.
That ordinary dissent trigger does not repeat Chapter 41's lease or other- disposition verbs. The articles, bylaws, or a board resolution may add dissent rights for voting or nonvoting holders. Federal covered securities are excluded, and the articles may prospectively limit or eliminate preferred-share rights subject to § 23-1-44-8(c)'s one-year protection for specified existing or issuable shares.
Ind. Code § 23-1-44-10 requires the meeting notice to state that shareholders are or may be entitled to dissenters' rights. A qualifying no-vote action instead triggers written action notice and the separate statutory dissenters' notice.
What trips people up
- The 25% test measures the retained business. Both the asset component and either the pretax-income or revenue component must reach 25% for the conclusive safe harbor.
- The meeting vote is not a majority of all entitled votes. A majority of entitled votes must be present; with quorum, votes favoring must exceed votes opposing unless a greater requirement applies.
- Subsidiary assets count twice in the architecture. Consolidated figures control the safe harbor, and direct or indirect consolidated-subsidiary assets are treated as parent assets throughout § 23-1-41-2.
- Chapter 41 and dissent law use different triggers. Approval follows the significant-continuing-activity test, while ordinary dissent rights name a sale or exchange of all or substantially all property.
Common questions
Does a usual-course disposition require shareholder approval?
Not under § 23-1-41-1 unless the articles require it. The section separately protects encumbrances and transfers to a wholly owned corporation.
Can shareholders approve by written consent?
Yes. For an ordinary private corporation, § 23-1-29-4(b) permits the meeting- equivalent minimum unless the articles provide otherwise, with its 60-day aggregation and postaction notice rules.
May the corporation abandon after shareholders approve?
Yes, before consummation. Section 23-1-41-2(f) preserves other parties' contractual rights.
Does the Chapter 41 rule govern a dissolution sale?
No. Section 23-1-41-2(h) expressly excludes dispositions in the course of dissolution under the listed chapters. Separate dissent law nevertheless names a qualifying sale in dissolution.
Statutes and sources
- Ind. Code §§ 23-1-20-5 and 23-1-41-1 to -2. The quoted current text defines the domestic for-profit corporation and supplies the significant- activity trigger, 25% safe harbor, consolidated-subsidiary treatment, board process, notice, quorum, exclusions, and abandonment. Official Indiana General Assembly sources: https://iga.in.gov/ic/2026/Title_23/Article_1/Chapter_20.pdf and https://iga.in.gov/ic/2026/Title_23/Article_1/Chapter_41.pdf
- Ind. Code §§ 23-1-29-4 to -5 and 23-1-30-6 to -8. The quoted current text supplies written consent, meeting notice, quorum, votes-cast, and voting-group rules. Official Indiana General Assembly sources: https://iga.in.gov/ic/2026/Title_23/Article_1/Chapter_29.pdf and https://iga.in.gov/ic/2026/Title_23/Article_1/Chapter_30.pdf
- Ind. Code §§ 23-1-44-8 and 23-1-44-10. The quoted current text supplies dissent eligibility, exceptions, governing-record limits, and notice. Official Indiana General Assembly source: https://iga.in.gov/ic/2026/Title_23/Article_1/Chapter_44.pdf
- Sources accessed September 5, 2026.
Source links
Every statute quoted above, linked, with the date we checked it.
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