Corporate Sale of Substantially All Assets Approval Requirements in Montana

At a glance

Requirements one by one

The 25% pair is conclusive only when both parts are met

Mont. Code Ann. § 35-14-1202(1) applies to a non-exempt disposition that would leave the corporation without significant continuing business activity. The corporation is conclusively held to retain 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, so disputed financial and operating facts remain outside this survey.

The board initiates, recommends, and may condition

The board first adopts an authorizing resolution, submits the disposition, and ordinarily recommends approval. A conflict or special circumstance can support no recommendation. Mont. Code Ann. § 35-14-826 also permits agreed submission after the board determines it no longer recommends the matter. In either branch, § 35-14-1202(2) requires the board to inform holders of its basis.

The board may set conditions for shareholder approval or for the disposition's effectiveness. Those internal conditions do not answer commercial agreement or closing questions.

Every holder receives terms, conditions, and consideration

Section 35-14-1202(4) requires meeting notice to each voting and nonvoting holder. The notice states the purpose and describes the disposition, terms, conditions, and consideration. Mont. Code Ann. § 35-14-705(1) supplies the 10- to-60-day interval.

Mont. Code Ann. § 35-14-704 defaults no-meeting action to unanimous written consent. The articles may instead 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.

The articles may move the all-entitled vote within statutory floors

Section 35-14-1202(5) defaults to a majority of all votes entitled on the disposition and a majority of all votes entitled in each separately voting class or series. The articles may require a greater or lesser vote.

Mont. Code Ann. § 35-14-725(1), (3) supplies the lower boundary: every voting group needs the required quorum, and votes cast for must exceed votes cast against. Section 35-14-1202(5) also bars the articles from lowering any voting group's quorum below a majority of votes entitled on the matter.

Four exclusions and dissolution use different routes

Mont. Code Ann. § 35-14-1201 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 domestic or foreign entities, and a pro rata asset distribution to one or more classes or series.

Section 35-14-1202(7) places a disposition during dissolution under part 14 instead of the section's approval rule.

Approval may be abandoned before consummation

After shareholder approval and before consummation, § 35-14-1202(6) allows the corporation to abandon without another holder action, subject to other parties' contractual rights. Part 12 states no statutory agreement execution, filing, amendment, or closing process.

Appraisal depends on holder, distribution, market, and consideration facts

Mont. Code Ann. § 35-14-1302(1)-(3) governs appraisal eligibility and its limitations. Subsection (1)(c) makes consummation of a § 35-14-1202 disposition an appraisal trigger for a holder entitled to vote. The section can remove or restore rights depending on a pro rata cash distribution of net assets within one year, reasonable claims reserves, interested-transaction status, organized-market or covered-security status, consideration, and a valid preferred-share limitation. Articles, bylaws, or a board resolution may also grant appraisal for another disposition.

Mont. Code Ann. § 35-14-1320(1), (3) 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 part 13.

What trips people up

• The safe harbor does not run backward. The 25%-plus-25% pair is conclusive when met, but the statute does not say that missing either measure conclusively eliminates significant continuing activity.
• The articles may lower the ordinary vote, but not the floor. A lesser articles threshold still needs a majority-entitled quorum and more votes cast for than against in every affected voting group.
• Appraisal starts with voting entitlement. An asset-disposition holder must be entitled to vote before the section's market, distribution, consideration, interested-transaction, and preferred-share filters are applied.

Common questions

Are subsidiary assets included with the parent?

Yes, for direct and indirect consolidated subsidiaries. Section 35-14-1202(8) treats their assets as parent assets for this approval analysis.

Must nonvoting holders receive disposition materials?

Yes. Section 35-14-1202(4) sends every holder the meeting notice and its description of terms, conditions, and consideration. The consent route supplies equivalent post-action materials to nonvoters.

Does part 12 require a state filing?

No filing step appears in Mont. Code Ann. §§ 35-14-1201 to -1202. Other transaction, property, regulatory, or dissolution law may independently require a filing.

Statutes and sources

• Mont. Code Ann. §§ 35-14-1201 to -1202 — exclusions, significant-activity trigger, conclusive 25% safe harbor, subsidiaries, board action, notice, vote, dissolution, and abandonment. Official section 1201 text and official section 1202 text, accessed September 5, 2026.
• Mont. Code Ann. §§ 35-14-704 to -705, -725, and -826 — consent, meeting notice, statutory vote floor, and agreed submission after nonrecommendation. Official section 704 text, section 705 text, section 725 text, and section 826 text, accessed September 5, 2026.
• Mont. Code Ann. §§ 35-14-1302 and -1320 — appraisal eligibility, limitations, and notice. Official appraisal-right text and official appraisal-notice text, accessed September 5, 2026.