Corporate Sale of Substantially All Assets Approval Requirements in Vermont

At a glance

Requirements one by one

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

11A V.S.A. § 12.02(a) requires approval for a non-exempt disposition that would leave the corporation without significant continuing business activity. The corporation conclusively retains 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.

The text does not make missing either percentage conclusive in the opposite direction. It states no separate subsidiary-valuation or investment-holding rule.

The board recommends but need not use a prescribed initiating resolution

The board ordinarily recommends approval. A conflict or special circumstance can support no recommendation if the board communicates its basis with the submission. It may condition submission on any basis. Section 12.02 states no prescribed initiating resolution or separate principal-terms approval.

Every holder receives a transaction description

Section 12.02(d) requires meeting notice to each voting and nonvoting holder. It states the purpose and contains or accompanies a transaction description, but does not prescribe a separate terms, conditions, or consideration list. 11A V.S.A. § 7.05(a) supplies the 10-to-60-day interval.

Under 11A V.S.A. § 7.04, written action defaults to unanimity unless the articles preclude it. Specific articles authority can instead permit a majority of all entitled shares to act after prior notice to every shareholder, followed by prompt notice to all entitled voters after less-than-unanimous action.

Approval uses a majority of all entitled votes

Section 12.02(e) requires a majority of all votes entitled on the transaction. The articles or a board condition may require a greater vote or voting groups. The section does not itself create a separate class, series, or group vote.

Three exclusions and distributions use different routes

11A V.S.A. § 12.01 removes three actions from holder approval unless the articles require it: a usual-and-regular-course disposition of all or substantially all property, an encumbrance in or outside that course, and a transfer to a corporation whose every share the transferor owns.

Section 12.02(g) sends a transaction constituting a distribution to § 6.40. Chapter 12 states no dissolution exclusion.

Authorization may be abandoned, subject to contract rights

After authorization, § 12.02(f) allows abandonment without another holder action, subject to contractual rights. The text states no express preconsummation cutoff. Chapter 12 prescribes no statutory agreement, signature, filing, amendment, or closing process.

Dissent uses fewer transaction verbs than approval

11A V.S.A. § 13.02(a)(5) grants dissent to an entitled voter on a non-usual- course sale or exchange of all or substantially all property, including a sale in dissolution. It excludes a court-ordered sale and a cash sale under a plan distributing all or substantially all net proceeds within one year. It does not name a lease or every other-disposition verb in § 12.02.

11A V.S.A. § 13.20 links meeting and no-vote notice to the dissent chapter. Section 13.02(b) limits an eligible holder's challenge to action that is unlawful or fraudulent as to the holder or corporation.

What trips people up

• The safe harbor does not run backward. The 25%-plus-25% pair is conclusive when met, but missing either measure is not declared conclusive.
• Notice carries a description, not a prescribed term sheet. Section 12.02 does not require separate terms, conditions, or consideration materials.
• Dissent is narrower than the approval verbs. The dissent trigger names a qualifying sale or exchange, while § 12.02 also names leases and other dispositions.

Common questions

Can articles permit less-than-unanimous written action?

Yes. Specific authority may permit a majority of all entitled shares to act, with prior notice to every shareholder and prompt notice to entitled voters afterward.

Is a pro rata distribution one of section 12.01's exemptions?

No. Vermont instead sends a transaction constituting a distribution to the separate § 6.40 rule through § 12.02(g).

Does Chapter 12 require a public filing?

No filing step appears in §§ 12.01-.02. Other transaction, property, regulatory, or dissolution law may independently require one.

Statutes and sources

• 11A V.S.A. §§ 12.01-.02 — exclusions, significant-activity trigger, conclusive 25% safe harbor, board recommendation, notice, vote, distribution, and abandonment. Official Chapter 12 text, accessed September 5, 2026.
• 11A V.S.A. §§ 7.04-.05 — unanimous and articles-based majority consent and meeting notice. Official Chapter 7 text, accessed September 5, 2026.
• 11A V.S.A. §§ 13.02 and 13.20 — dissent eligibility, exclusions, challenge limit, and notice. Official Chapter 13 text, accessed September 5, 2026.