Corporate Sale of Substantially All Assets Approval Requirements in Texas

At a glance

Requirements one by one

Texas defines the trigger by what business continues

Tex. Bus. Orgs. Code § 21.451 defines a sale of all or substantially all assets as an outside-the-usual-and-regular-course sale, lease, exchange, or other disposition of all or substantially all corporate property and assets. Whether goodwill travels with the disposition does not control the definition.

The definition then excludes a transaction that leaves the corporation directly or indirectly continuing one or more businesses. It also excludes a transaction when the corporation applies any portion of the consideration to a business it conducts afterward. The statute states no minimum size for that continuing business or applied consideration, no 25% safe harbor, and no consolidated- subsidiary or investment-holding valuation formula.

Under § 21.455(a), another real-property or asset transaction does not require shareholder approval unless the certificate of formation provides otherwise or the statutory all-or-substantially-all definition is met.

The board must approve, recommend or explain, and may condition

Tex. Bus. Orgs. Code § 21.455(c)-(e) requires a board resolution approving the sale. The board ordinarily recommends shareholder approval. If it determines for any reason not to recommend, it submits without a recommendation and must communicate that reason to the shareholders.

The board may condition submission on any basis. The statute does not prescribe a separate asset-sale agreement, signer, filing, or closing sequence; a commercial agreement and the corporate resolution remain distinct records.

Every shareholder receives at least 21 days' meeting notice

Tex. Bus. Orgs. Code § 21.456 requires notice to every shareholder, including a holder without a vote on the sale, no later than the 21st day before the meeting. The notice states that considering the fundamental business transaction is a purpose of the meeting.

The plan-copy-or-summary sentence in § 21.456(b) names a merger, conversion, or interest exchange, not an asset sale. The asset-sale provisions do not add a parallel requirement that the notice include a plan or full terms and consideration.

Two-thirds of all entitled shares is the default denominator

Tex. Bus. Orgs. Code §§ 21.457 and 21.458(c) supply the vote architecture. Section 21.457(a) ordinarily requires at least two-thirds of all outstanding shares entitled to vote, not merely two-thirds of votes cast or shares present. The certificate of formation may vary that threshold in accordance with the Code.

Section 21.458(c) gives a class or series a separate vote on the asset sale only when the certificate entitles it to that vote. Section 21.457(c) then ordinarily requires at least two-thirds of all outstanding shares in that class or series, in addition to the general vote, subject to Code and certificate variations.

Written consent remains available, with separate appraisal notice

Tex. Bus. Orgs. Code §§ 6.201(b)-(c) and 6.202(b), (d) supply the two consent routes. Section 6.201 permits unanimous written consent without a meeting, prior notice, or vote and gives it unanimous-meeting-vote effect. Section 6.202 lets the certificate authorize less-than-unanimous consent at the meeting-equivalent threshold and requires prompt notice and a reasonable description for nonconsenting record-date owners.

Those general mechanics do not replace the special appraisal notice. Tex. Bus. Orgs. Code § 10.355(a), (c)-(d) requires qualifying notice to accompany the meeting notice, reach a consenting owner before delivery of the consent, and reach a nonconsenting voting owner before the 11th day after the action takes effect.

Encumbrances use an express shareholder-vote exception

The definition in § 21.451 excludes a pledge, mortgage, deed of trust, or trust indenture unless the certificate provides otherwise. Section 21.461 separately lets the board authorize those transactions and says neither shareholder authorization nor consent is required for the transaction or a sale under it, again subject to the certificate.

Sections 21.451 and 21.455 state no separate wholly owned subsidiary, pro rata distribution, or dissolution exception. This cell does not infer one from another state's statute or a different Texas entity provision.

Abandonment preserves third-party contract rights

After shareholder approval, § 21.455(f) lets the board abandon the sale without further shareholder action or approval. That authority is expressly subject to the rights of a third party under a contract relating to the assets.

The abandonment provision does not decide whether a purchase agreement permits termination, requires a fee, creates damages, or has already made a closing or transfer effective.

Voting owners receive a conditional appraisal route

Tex. Bus. Orgs. Code §§ 21.460 and 21.461 address appraisal and encumbrances as separate subjects. Section 21.460 and §§ 10.351(a) and 10.354(a)(1)(B) supply the asset-sale appraisal boundary. Section 10.354 gives dissent and appraisal rights to an owner whose interest was entitled to vote when the Code requires owner approval for the sale. The right depends on compliance with the rest of Subchapter H.

Section 10.351(a) removes that subchapter when one owner, or only the owners who approved the transaction, hold all interests otherwise entitled to the rights. This page identifies eligibility and notice but does not determine perfection, fair value, payment, or court procedure for a particular holder.

What trips people up

• The Texas definition is not just a balance-sheet phrase. Continuing even one business, or applying a portion of consideration to a business conducted afterward, is written into the exclusion without a statutory percentage floor.
• The two-thirds vote uses outstanding shares. It is not two-thirds of the shares present at the meeting. Any class vote granted by the certificate also uses an outstanding-class denominator unless another valid rule changes it.
• Nonvoting notice and appraisal eligibility are different. Every shareholder receives the transaction meeting notice, but the asset-sale appraisal clause is tied to an ownership interest entitled to vote on a Code-required sale.

Common questions

Does pledging substantially all assets require a shareholder vote?

Not under the default in §§ 21.451 and 21.461. The certificate of formation can provide otherwise, and this answer does not classify a differently structured transfer as a pledge or foreclosure sale.

May the board submit the sale without recommending it?

Yes. Section 21.455 permits that route if the board communicates its reason for submitting the sale without a recommendation.

Does shareholder approval prevent the board from abandoning the sale?

No. Section 21.455(f) preserves board abandonment after approval without another holder action, subject to third-party contractual rights.

Statutes and sources

• Tex. Bus. Orgs. Code §§ 21.451 and 21.455-.461. The quoted current text supplies the continuing-business definition, board process, notice, vote, class, abandonment, encumbrance, and appraisal-reference rules. Official current Chapter 21 (accessed September 5, 2026).
• Tex. Bus. Orgs. Code §§ 10.351, 10.354, and 10.355. The quoted current text supplies asset-sale appraisal eligibility, the all-approved-owner exception, and notice. Official current Chapter 10 (accessed September 5, 2026).
• Tex. Bus. Orgs. Code §§ 6.201-.202. The quoted current text supplies the unanimous and certificate-authorized less-than-unanimous consent routes. Official current Chapter 6 (accessed September 5, 2026).