Corporate Sale of Substantially All Assets Approval Requirements in Iowa

At a glance

Requirements one by one

The 25% safe harbor uses two consolidated measurements

Iowa Code § 490.1202(1) applies when a non-exempt disposition would leave the corporation without significant continuing business activity. The conclusive safe harbor requires at least 25% of prior-year total assets and at least 25% of either continuing pretax income or continuing revenue for the corporation and its subsidiaries on a consolidated basis.

Falling short does not create a presumption that significant activity is absent. Direct and indirect consolidated-subsidiary assets are deemed parent assets, but the statute states no special investment-holding rule.

The board first authorizes, then ordinarily recommends

The board initiates through an authorizing resolution and recommends shareholder approval. It may proceed without a recommendation for conflicts, special circumstances, or the separately cross-referenced § 490.826 route, but must inform shareholders of its basis. Section 490.1202(3) permits conditions on the shareholder approval or the disposition's effectiveness.

Every shareholder gets the full meeting description

Section 490.1202(4) requires notice to every shareholder, voting or nonvoting. The notice states the disposition purpose and describes its terms, conditions, and consideration. Iowa Code § 490.705 supplies the 10-to-60-day interval.

At the meeting, § 490.1202(5) requires a quorum consisting of a majority of all votes entitled. Under § 490.725, approval then requires votes cast for to exceed votes cast against. The articles, bylaws, or a board condition may require a greater vote or quorum.

Written consent under § 490.704 defaults to 90% of votes entitled. An eligible corporation without Exchange Act-registered equity may put the meeting-equivalent threshold in its articles. Consents must become sufficient within 60 days; nonvoters and nonconsenting voters receive notice within 10 days after sufficiency or permitted later tabulation.

Four exclusions and dissolution sit outside the trigger

Iowa Code § 490.1201 removes a usual-course disposition, an encumbrance inside or outside that course, a transfer to wholly owned entities, and a pro rata class or series asset distribution. The articles may require approval for those otherwise exempt actions. A disposition in the course of dissolution is outside § 490.1202.

Approval can be abandoned before consummation

After shareholder approval and before consummation, § 490.1202(6) permits the corporation to abandon without shareholder action, subject to other parties' contractual rights. Subchapter XII states no separate statutory agreement execution, filing, amendment, or closing process.

Appraisal is vote-linked and the remedy limits have exceptions

Section 490.1302 grants appraisal to a holder entitled to vote when a § 490.1202 disposition is consummated. Its cash/net-assets distribution within one year, interested-transaction, market, consideration-distribution, and preferred-share rules can change eligibility. Iowa Code § 490.1320 makes the meeting notice state whether appraisal is, is not, or may be available and supplies parallel consent notices and a statute-copy requirement.

After shareholder approval, § 490.1340 generally limits a shareholder from contesting, enjoining, setting aside, or rescinding the action. Its exceptions preserve challenges for specified authorization defects, fraud or material misstatements or omissions, interested transactions, and a narrow nonunanimous- consent notice failure.

What trips people up

• The safe harbor is AND plus either/or. Retained assets must reach 25%, and either continuing pretax income or continuing revenue must also reach 25%.
• The meeting rule separates quorum from approval. A majority of votes entitled supplies the quorum; once present, votes cast for must exceed votes cast against unless a greater requirement applies.
• Appraisal is narrower than all-holder notice. Every holder receives the transaction notice, but ordinary statutory appraisal is tied to eligibility to vote and remains subject to § 490.1302's limits.

Common questions

Does missing the 25% safe harbor establish that approval is required?

No. Section 490.1202(1) expressly says no presumption arises merely because the continuing activity falls below its percentages.

Can the articles require a vote for a usual-course disposition?

Yes. Section 490.1201 makes its four listed transactions vote-free unless the articles provide otherwise.

Is a disposition in dissolution governed by the same section?

No. Section 490.1202(7) places a disposition in the course of dissolution outside that section.

Statutes and sources

• Iowa Code §§ 490.101 and .140(6) — act and covered domestic for-profit corporation. Official Iowa Code 2026 Chapter 490, accessed September 5, 2026.
• Iowa Code §§ 490.704-.705 and .725 — consent, notice, quorum, and votes-cast approval. Official Iowa Code 2026 Chapter 490, accessed September 5, 2026.
• Iowa Code §§ 490.1201-.1202 — exclusions, significant-activity trigger, 25% safe harbor, subsidiaries, board action, notice, vote, dissolution, and abandonment. Official Iowa Code 2026 Chapter 490, accessed September 5, 2026.
• Iowa Code §§ 490.1302, .1320, and .1340 — appraisal eligibility, notice, and remedy limits. Official Iowa Code 2026 Chapter 490, accessed September 5, 2026.