Corporate Sale of Substantially All Assets Approval Requirements in Tennessee

At a glance

Requirements one by one

Start with the parent and subsidiary property tests

Tenn. Code Ann. § 48-22-102(a) governs a sale, lease, exchange, or other disposition of all or substantially all corporate property, with or without goodwill, outside the usual and regular course. The board proposes and the shareholders approve. The section supplies no asset, income, revenue, or other percentage safe harbor for that qualitative trigger.

Tennessee does add an 80%-ownership attribution rule. An outside-course disposition of all or substantially all property by one or more subsidiaries is treated as the parent's disposition if the parent owns shares carrying at least 80% of all subsidiary voting power entitled to elect directors and the subsidiary or subsidiaries constitute all or substantially all of the parent's property. That is an ownership-and-attribution rule, not a transaction-size safe harbor.

The board recommends and may condition submission

Section 48-22-102(a)-(c) has the board determine terms, conditions, and consideration and propose the transaction. It also requires a recommendation unless the board decides that a conflict of interest or other special circumstances justify no recommendation and communicates the basis with the submission.

The board may condition submission on any basis. Chapter 22 states no separate statutory agreement, signature, filing, closing, or amendment process for the property disposition.

Every shareholder receives the meeting notice

Section 48-22-102(d) requires notice to every shareholder, voting or nonvoting. The notice states that the disposition is a meeting purpose and contains or accompanies a transaction description. Tenn. Code Ann. § 48-17-105 sets the general timing at no fewer than 10 days and no more than two months before the meeting and requires a special-meeting purpose description.

The general § 48-17-104 consent route is unanimous by default. The charter may instead authorize the meeting-equivalent minimum. Because Chapter 22 requires notice to nonvoting holders, they receive meeting-equivalent materials at least 10 days before consent action; nonconsenting voting holders receive action notice within 10 days after sufficient consents are delivered or an authorized later tabulation is complete.

The default vote counts all entitled votes

Section 48-22-102(e) requires a majority of all votes entitled to be cast on the transaction, not a majority of votes cast at the meeting. The charter or board, through a condition under subsection (c), may require a greater vote or voting by groups. Section 48-22-102 states no automatic separate class or series vote.

The no-vote routes are express and different

Tenn. Code Ann. § 48-22-101(a)-(b) generally leaves shareholder approval to the charter for three categories: an all-or-substantially-all disposition in the usual and regular course; a mortgage, pledge, debt dedication, or other encumbrance of any or all property whether or not usual-course; and a transfer of any or all assets to one or more corporations or other entities whose shares or interests the transferring corporation wholly owns.

Section 48-22-102(g) separately sends a transaction constituting a distribution to § 48-16-401. Chapter 22 does not state a dissolution exclusion, and the dissent statute expressly addresses a sale in dissolution.

Authorization may be followed by abandonment

After authorization, § 48-22-102(f) permits abandonment without another shareholder action. That authority is subject to contractual rights and does not decide termination remedies, financing conditions, escrow mechanics, or a commercial agreement's effect.

Dissent rights use a narrower verb list

Tenn. Code Ann. § 48-23-102(a)(3) grants dissent and fair-value payment rights on consummation of an outside-course sale or exchange of all or substantially all corporate property. It reaches an entitled meeting voter and a qualifying nonconsenting written-consent holder, includes a sale in dissolution, and excludes a court-ordered sale and a cash sale under a plan distributing all or substantially all net proceeds within one year.

That ordinary trigger names a “sale or exchange”; it does not repeat § 48-22-102's lease or other-disposition verbs. The charter, bylaws, or a board resolution may extend dissent rights to voting or nonvoting holders for another shareholder-voted action. Exchange-listed and national-market-system shares are excluded by § 48-23-102(c).

Tenn. Code Ann. § 48-23-201 requires meeting and consent notices to state the corporation's conclusion that dissenters' rights are, are not, or may be available and, when appropriate, to include Chapter 23. Failure to give that notice does not itself invalidate the corporate action, although the remaining dissent procedure and any remedy require separate analysis.

What trips people up

• The 80% figure is not a safe harbor. It determines when a subsidiary's outside-course disposition is attributed to the parent, and the subsidiaries must also constitute all or substantially all parent property.
• The vote counts all entitled votes. A majority of votes cast is not the default in § 48-22-102(e).
• A wholly owned transfer differs from the 80% subsidiary rule. Section 48-22-101(a)(3) is a no-vote route for a transfer to wholly owned recipients; § 48-22-102(a) attributes qualifying subsidiary dispositions upward.
• Approval and dissent use different verbs. Chapter 22 approval covers a sale, lease, exchange, or other disposition, but the ordinary dissent trigger names a consummated sale or exchange.

Common questions

Does an ordinary-course disposition require shareholder approval?

Not under § 48-22-101 unless the charter requires it. The board still determines the terms, conditions, and consideration.

May shareholders act by written consent?

Yes. Section 48-17-104 permits unanimous voting-holder consent by default and a charter-authorized meeting-minimum route, with separate notices to covered nonvoters and nonconsenters.

Can the transaction be abandoned after authorization?

Yes. Section 48-22-102(f) allows abandonment without further shareholder action subject to contractual rights.

Does an outside-course lease automatically create dissenters' rights?

The ordinary trigger in § 48-23-102(a)(3) names a sale or exchange, not a lease. The charter, bylaws, or a board resolution can add rights under subsection (a)(5), and the complete transaction and governing records control.

Statutes and sources

• Tenn. Code Ann. §§ 48-11-201(7), 48-17-104 to -105, and 48-22-101 to -102. The quoted current text defines the domestic business corporation and supplies consent, meeting notice, usual-course, extraordinary-disposition, subsidiary, board, vote, exception, distribution, and abandonment rules. Current public-domain Title 48 text: https://unicourt.github.io/cic-code-tn/transforms/tn/octn/r76/gov.tn.tca.title.48.html
• Tenn. Code Ann. §§ 48-23-102 and 48-23-201. The quoted current text supplies dissent eligibility, exclusions, governing-record extensions, and meeting/consent notice. Current public-domain Title 48 text: https://unicourt.github.io/cic-code-tn/transforms/tn/octn/r76/gov.tn.tca.title.48.html
• 2012 Tenn. Pub. Acts ch. 1051 and 2015 Tenn. Pub. Acts ch. 60. The official enacted texts ground the current corporation definition and the relied-on post-1989 amendments to the wholly owned transfer, consent, dissent, and dissent-notice provisions. Official Tennessee Secretary of State sources: https://publications.tnsosfiles.com/acts/107/pub/pc1051.pdf and https://publications.tnsosfiles.com/acts/109/pub/pc0060.pdf
• Sources accessed September 5, 2026.