M&A Conditions Precedent Checklist - Texas
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M&A CONDITIONS PRECEDENT CHECKLIST
State of Texas
Transaction Name: [________________________________]
Transaction Type: ☐ Stock/Ownership Interest Purchase ☐ Asset Purchase ☐ Statutory Merger ☐ Interest Exchange ☐ Other: [________________________________]
Seller/Target: [________________________________]
Buyer/Acquirer: [________________________________]
Anticipated Closing Date: [__/__/____]
Definitive Agreement Date: [__/__/____]
Outside Date (Drop-Dead Date): [__/__/____]
Deal Counsel (Seller): [________________________________]
Deal Counsel (Buyer): [________________________________]
STATUS KEY:
- NS = Not Started
- IP = In Progress
- PC = Pending Counterparty
- PR = Pending Regulatory
- C = Complete
- W = Waived
- NA = Not Applicable
PART I: PRE-CLOSING CONDITIONS
A. Regulatory Approvals
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 1.1 | Hart-Scott-Rodino (HSR) Act filing (if transaction exceeds $126.4 million size-of-transaction threshold for 2025; 15 U.S.C. 18a) | ☐ Buyer ☐ Seller | [____] | [__/__/____] | Filing fee tiered by deal value |
| 1.2 | HSR waiting period expired or early termination granted | ☐ Buyer ☐ Seller | [____] | [__/__/____] | 30-day initial waiting period |
| 1.3 | Federal industry-specific regulatory approvals (e.g., FCC, FDIC, OCC, SEC, DOT, FAA, FERC) | [________________________________] | [____] | [__/__/____] | |
| 1.4 | Texas state regulatory approvals (if applicable): | ||||
| ☐ Texas Department of Insurance (TDI) (change of control of insurer, Tex. Ins. Code Ch. 823) | [________________________________] | [____] | [__/__/____] | ||
| ☐ Texas Department of Banking (bank transactions, Tex. Fin. Code Ch. 32) | [________________________________] | [____] | [__/__/____] | ||
| ☐ Texas Public Utility Commission (PUC) (electric utility transactions, Tex. Util. Code 14.101) | [________________________________] | [____] | [__/__/____] | ||
| ☐ Texas Railroad Commission (oil and gas operations; pipeline transfers) | [________________________________] | [____] | [__/__/____] | ||
| ☐ Texas Alcoholic Beverage Commission (TABC) (liquor license/permit transfers, Tex. Alco. Bev. Code 61.01 et seq.) | [________________________________] | [____] | [__/__/____] | ||
| ☐ Texas Health and Human Services Commission (HHSC) (healthcare facility license transfers) | [________________________________] | [____] | [__/__/____] | ||
| ☐ Texas Commission on Environmental Quality (TCEQ) (environmental permit transfers) | [________________________________] | [____] | [__/__/____] | ||
| 1.5 | CFIUS review/clearance (if foreign buyer; 50 U.S.C. 4565) | [________________________________] | [____] | [__/__/____] | |
| 1.6 | Other federal or state approvals: [________________________________] | [________________________________] | [____] | [__/__/____] |
B. Third-Party Consents
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 2.1 | Consent from counterparties to material contracts with change-of-control provisions | [________________________________] | [____] | [__/__/____] | List contracts in schedule |
| 2.2 | Landlord consents for assigned leases | [________________________________] | [____] | [__/__/____] | |
| 2.3 | Licensor consents for assigned IP licenses | [________________________________] | [____] | [__/__/____] | |
| 2.4 | Lender consents / waivers under credit facilities | [________________________________] | [____] | [__/__/____] | |
| 2.5 | Surety/bonding company consents | [________________________________] | [____] | [__/__/____] | |
| 2.6 | Customer consents (if required by contract) | [________________________________] | [____] | [__/__/____] | |
| 2.7 | Supplier consents (if required by contract) | [________________________________] | [____] | [__/__/____] | |
| 2.8 | Joint venture or partnership consents | [________________________________] | [____] | [__/__/____] | |
| 2.9 | Franchisor consent (if franchise agreement involved) | [________________________________] | [____] | [__/__/____] | |
| 2.10 | Government contract novation/assignment (FAR 42.12 if federal contracts) | [________________________________] | [____] | [__/__/____] |
C. Owner/Shareholder Approvals
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 3.1 | Seller/Target owner approval of merger (BOC 10.003 and BOC 21.457 for corporations -- requires two-thirds of outstanding shares entitled to vote, unless governing documents require greater or lesser vote (but not less than majority)) | [________________________________] | [____] | [__/__/____] | TX default is 2/3 |
| 3.2 | Buyer owner approval (if required by buyer's governing documents or applicable law) | [________________________________] | [____] | [__/__/____] | |
| 3.3 | Written consents in lieu of meeting obtained (if permitted under BOC 6.201-6.202) | [________________________________] | [____] | [__/__/____] | |
| 3.4 | Dissenter/appraisal rights notices sent (BOC 10.301-10.313; right to receive fair value) | [________________________________] | [____] | [__/__/____] | |
| 3.5 | Dissenter/appraisal demand period expired or claims resolved | [________________________________] | [____] | [__/__/____] | |
| 3.6 | Short-form merger: parent owns at least 90% of outstanding ownership interests of each class of subsidiary (BOC 10.006) -- no subsidiary owner vote required | [________________________________] | [____] | [__/__/____] | If applicable |
PART II: SELLER'S CONDITIONS TO CLOSING (Conditions for Seller's Benefit)
A. Representations and Warranties Bring-Down
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 4.1 | Buyer's representations and warranties true and correct as of Closing Date (to applicable standard: ☐ in all respects ☐ in all material respects ☐ subject to MAE qualifier) | Buyer | [____] | [__/__/____] | |
| 4.2 | Buyer's officer certificate confirming accuracy of representations | Buyer | [____] | [__/__/____] |
B. Buyer's Covenants Performed
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 5.1 | Buyer has performed all covenants required to be performed on or before Closing | Buyer | [____] | [__/__/____] | |
| 5.2 | Buyer's officer certificate confirming performance of covenants | Buyer | [____] | [__/__/____] |
C. Other Seller Conditions
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 6.1 | No litigation or proceeding threatening Seller's ability to consummate transaction | Both | [____] | [__/__/____] | |
| 6.2 | Receipt of Buyer's closing deliverables (see Part VI) | Buyer | [____] | [__/__/____] | |
| 6.3 | Financing confirmed / evidence of available funds | Buyer | [____] | [__/__/____] |
PART III: BUYER'S CONDITIONS TO CLOSING (Conditions for Buyer's Benefit)
A. Representations and Warranties Bring-Down
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 7.1 | Seller's representations and warranties true and correct as of Closing Date (to applicable standard: ☐ in all respects ☐ in all material respects ☐ subject to MAE qualifier) | Seller | [____] | [__/__/____] | |
| 7.2 | Seller's officer certificate confirming accuracy of representations | Seller | [____] | [__/__/____] | |
| 7.3 | No Material Adverse Effect has occurred since date of definitive agreement | Seller | [____] | [__/__/____] |
B. Seller's Covenants Performed
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 8.1 | Seller has performed all covenants required to be performed on or before Closing | Seller | [____] | [__/__/____] | |
| 8.2 | Seller has complied with conduct-of-business covenant (interim operating covenants) | Seller | [____] | [__/__/____] | |
| 8.3 | Seller's officer certificate confirming performance of covenants | Seller | [____] | [__/__/____] |
C. No Material Adverse Change (MAC/MAE)
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 9.1 | No MAC/MAE has occurred with respect to the Target since the agreement date | Seller | [____] | [__/__/____] | Confirm MAE definition in agreement |
| 9.2 | No material damage or destruction to Target's assets | Seller | [____] | [__/__/____] |
D. Legal Opinions
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 10.1 | Legal opinion from Seller's counsel (authorization, enforceability, no conflicts) | Seller's Counsel | [____] | [__/__/____] | |
| 10.2 | Regulatory opinion(s) if required | [________________________________] | [____] | [__/__/____] |
E. Financial and Diligence Conditions
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 11.1 | Updated financial statements delivered (if required) | Seller | [____] | [__/__/____] | |
| 11.2 | Working capital estimate delivered | Seller | [____] | [__/__/____] | |
| 11.3 | No undisclosed liabilities discovered | Seller | [____] | [__/__/____] | |
| 11.4 | Environmental assessment complete (if required) | Buyer | [____] | [__/__/____] | |
| 11.5 | Buyer's financing confirmed (commitment letters, credit agreements executed) | Buyer | [____] | [__/__/____] |
PART IV: MUTUAL CONDITIONS TO CLOSING
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 12.1 | No injunction, restraining order, or decree preventing consummation | Both | [____] | [__/__/____] | |
| 12.2 | No law enacted or pending that prohibits the transaction | Both | [____] | [__/__/____] | |
| 12.3 | All required regulatory approvals obtained (see Part I.A) | Both | [____] | [__/__/____] | |
| 12.4 | All required third-party consents obtained (see Part I.B) | Both | [____] | [__/__/____] | |
| 12.5 | All required owner/shareholder approvals obtained (see Part I.C) | Both | [____] | [__/__/____] | |
| 12.6 | HSR waiting period expired or terminated (if applicable) | Both | [____] | [__/__/____] | |
| 12.7 | No governmental litigation or investigation threatening transaction | Both | [____] | [__/__/____] |
PART V: TEXAS-SPECIFIC REQUIREMENTS
A. State Merger Filings (Statutory Merger Transactions)
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 13.1 | Prepare Certificate of Merger per BOC 10.151-10.158 (Form 622 -- Certificate of Merger) | Deal Counsel | [____] | [__/__/____] | |
| 13.2 | Certificate must include: name and jurisdiction of each merging entity; name of surviving entity; statement that plan of merger was approved as required; amendments to certificate of formation (if any); effective date | Deal Counsel | [____] | [__/__/____] | Per BOC 10.151 |
| 13.3 | Certificate signed by authorized representative of each merging entity | Both | [____] | [__/__/____] | |
| 13.4 | File Certificate of Merger (Form 622) with Texas Secretary of State, P.O. Box 13697, Austin, TX 78711-3697 | Deal Counsel | [____] | [__/__/____] | Filing fee: $300 for domestic for-profit corporation; verify current fee at sos.state.tx.us |
| 13.5 | Tax clearance requirement: include either (a) statement that surviving entity is responsible for franchise tax obligations or (b) Certificate of Account Status from Texas Comptroller | Deal Counsel | [____] | [__/__/____] | See Part V.C below |
| 13.6 | Merger effective upon filing or on later date/time specified in certificate (not more than 90 days after filing; BOC 10.152) | Deal Counsel | [____] | [__/__/____] | |
| 13.7 | Short-form merger (parent owns at least 90% of outstanding ownership interests of each class of subsidiary, BOC 10.006): board/governing authority resolution of parent; no subsidiary owner vote | Deal Counsel | [____] | [__/__/____] | |
| 13.8 | If non-surviving entity is a foreign entity qualified in Texas, file certificate of withdrawal (Form 608) | Deal Counsel | [____] | [__/__/____] |
B. Texas Good Standing and Entity Status
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 14.1 | Obtain Certificate of Fact -- Status (good standing equivalent) for Seller/Target from Texas Secretary of State | Seller | [____] | [__/__/____] | |
| 14.2 | Obtain Certificate of Good Standing for Buyer from its state of organization | Buyer | [____] | [__/__/____] | |
| 14.3 | Confirm Seller/Target franchise tax reports are current with Texas Comptroller | Seller | [____] | [__/__/____] | |
| 14.4 | Confirm no forfeiture of right to transact business by Texas Comptroller (Tex. Tax Code 171.301 et seq.) | Seller | [____] | [__/__/____] | |
| 14.5 | Confirm entity is not on Comptroller's forfeiture list | Seller | [____] | [__/__/____] | Check at comptroller.texas.gov |
| 14.6 | If Buyer is a foreign entity, confirm registration to transact business in Texas (BOC 9.001 et seq.) | Buyer | [____] | [__/__/____] |
C. Texas Comptroller -- Franchise Tax Clearance
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 15.1 | Obtain Certificate of Account Status from Texas Comptroller (Form 05-359), OR include statement in Certificate of Merger that surviving entity assumes franchise tax responsibility | Seller | [____] | [__/__/____] | Required before SOS will file merger |
| 15.2 | File final franchise tax report with Comptroller for the disappearing entity | Seller | [____] | [__/__/____] | |
| 15.3 | File appropriate Public Information Report or Ownership Information Report | Seller | [____] | [__/__/____] | |
| 15.4 | Ensure all franchise tax, penalties, and interest are paid through date of merger | Seller | [____] | [__/__/____] | |
| 15.5 | No-tax-due threshold: entities with annualized total revenue of $2.47 million or less are not required to pay franchise tax (but must still file report) | Seller | [____] | [__/__/____] | Threshold as of 2024 reports |
| 15.6 | Request Tax Clearance Letter (Form 05-391) if needed for reinstatement or other purposes | Seller | [____] | [__/__/____] | Different from Certificate of Account Status |
D. Texas Tax Matters
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 16.1 | Texas franchise (margin) tax obligations current (Tex. Tax Code Ch. 171) | Seller | [____] | [__/__/____] | Texas has no corporate income tax; franchise tax is the margin tax |
| 16.2 | Texas sales and use tax clearance (if asset sale involving tangible personal property; Tex. Tax Code Ch. 151) | Seller | [____] | [__/__/____] | 6.25% state rate + up to 2% local |
| 16.3 | Texas Comptroller -- request sales tax clearance letter to mitigate buyer's successor liability (Tex. Tax Code 111.020) | Buyer | [____] | [__/__/____] | Recommended for asset purchases |
| 16.4 | Texas does not impose a state income tax on individuals or entities (Tex. Const. Art. VIII, 24-a) | N/A | N/A | N/A | No individual or corporate income tax |
| 16.5 | Texas does not impose a real property transfer tax or documentary stamp tax | N/A | N/A | N/A | No state transfer tax on real property |
| 16.6 | Texas unemployment compensation tax obligations current (Tex. Lab. Code Ch. 204-213) | Seller | [____] | [__/__/____] | Texas Workforce Commission |
| 16.7 | Ad valorem (property) tax clearance for real and personal property (Tex. Tax Code Ch. 11-26) | Seller | [____] | [__/__/____] | Taxes assessed by county/school district/municipality |
| 16.8 | Severance tax clearance (if oil, gas, or natural resource assets; Tex. Tax Code Ch. 201-203) | Seller | [____] | [__/__/____] | Oil production tax (4.6%); natural gas production tax (7.5%) |
E. Texas-Specific Licensing and Permits
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 17.1 | Transfer or re-issuance of Texas sales tax permit (Comptroller) | [________________________________] | [____] | [__/__/____] | |
| 17.2 | Transfer of professional or occupational licenses (Texas Department of Licensing and Regulation or applicable board) | [________________________________] | [____] | [__/__/____] | |
| 17.3 | Transfer of TCEQ environmental permits | [________________________________] | [____] | [__/__/____] | |
| 17.4 | Transfer of Texas Railroad Commission permits (oil and gas operations, pipeline, gas utility) | [________________________________] | [____] | [__/__/____] | P-4 (Producer's Certificate of Compliance) |
| 17.5 | Transfer of TABC alcoholic beverage permits | [________________________________] | [____] | [__/__/____] | |
| 17.6 | Transfer of HHSC healthcare facility licenses | [________________________________] | [____] | [__/__/____] | |
| 17.7 | Texas Department of Licensing and Regulation (TDLR) contractor registrations | [________________________________] | [____] | [__/__/____] | |
| 17.8 | Local city/county permits and business registrations | [________________________________] | [____] | [__/__/____] |
F. Bulk Sales Considerations
| # | Condition | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 18.1 | Texas has repealed UCC Article 6 (Bulk Transfers); no general bulk sales law compliance required | N/A | N/A | N/A | |
| 18.2 | If asset purchase, confirm no creditor notification obligations under contract or other applicable law | Deal Counsel | [____] | [__/__/____] | |
| 18.3 | Request sales tax clearance letter from Texas Comptroller to mitigate successor liability | Buyer | [____] | [__/__/____] | Recommended for asset purchases |
PART VI: CLOSING DELIVERABLES CHECKLIST
A. Seller's Closing Deliverables
| # | Deliverable | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 19.1 | Executed definitive agreement (or confirmation of prior execution) | Seller | [____] | [__/__/____] | |
| 19.2 | Officer's certificate (re: reps, warranties, covenants) | Seller | [____] | [__/__/____] | |
| 19.3 | Secretary's certificate (certificate of formation, bylaws/company agreement, resolutions, incumbency) | Seller | [____] | [__/__/____] | |
| 19.4 | Certificate of Fact -- Status from Texas Secretary of State (dated within [____] days of Closing) | Seller | [____] | [__/__/____] | |
| 19.5 | Certificate of Account Status from Texas Comptroller (Form 05-359) | Seller | [____] | [__/__/____] | Required for merger filing |
| 19.6 | Board/governing authority resolutions authorizing the transaction | Seller | [____] | [__/__/____] | |
| 19.7 | Owner/shareholder approval documentation (reflecting two-thirds vote or applicable threshold) | Seller | [____] | [__/__/____] | |
| 19.8 | FIRPTA certificate (IRC 1445; non-foreign affidavit) | Seller | [____] | [__/__/____] | |
| 19.9 | IRS Form W-9 (Seller) | Seller | [____] | [__/__/____] | |
| 19.10 | Stock certificates / ownership interest certificates (endorsed or with powers) | Seller | [____] | [__/__/____] | Stock/interest purchase only |
| 19.11 | Bill of Sale | Seller | [____] | [__/__/____] | Asset purchase only |
| 19.12 | Assignment and Assumption Agreement | Both | [____] | [__/__/____] | Asset purchase only |
| 19.13 | IP Assignment Agreement(s) | Seller | [____] | [__/__/____] | |
| 19.14 | Real property deeds (general warranty deed or special warranty deed; Texas uses statutory form per Tex. Prop. Code 5.022) | Seller | [____] | [__/__/____] | Record with county clerk |
| 19.15 | Vehicle title transfers (Texas DMV, Form 130-U) | Seller | [____] | [__/__/____] | |
| 19.16 | Domain name transfer documentation | Seller | [____] | [__/__/____] | |
| 19.17 | Payoff letters from Seller's lenders | Seller | [____] | [__/__/____] | |
| 19.18 | UCC-3 termination statements (lien releases; file with Texas Secretary of State) | Seller | [____] | [__/__/____] | |
| 19.19 | Executed non-competition/non-solicitation agreements | Seller/Key Employees | [____] | [__/__/____] | Texas enforces non-competes under Tex. Bus. & Com. Code 15.50-15.52 |
| 19.20 | Executed employment/consulting agreements with key employees | Seller/Key Employees | [____] | [__/__/____] | |
| 19.21 | Executed transition services agreement (if applicable) | Both | [____] | [__/__/____] | |
| 19.22 | Escrow agreement (if applicable) | Both | [____] | [__/__/____] | |
| 19.23 | Legal opinion of Seller's counsel | Seller's Counsel | [____] | [__/__/____] | |
| 19.24 | Resignations of directors/managers and officers (as agreed) | Seller | [____] | [__/__/____] | |
| 19.25 | Landlord estoppels and SNDAs | Seller | [____] | [__/__/____] | |
| 19.26 | Tax allocation schedule (asset purchase, IRC 1060) | Both | [____] | [__/__/____] | |
| 19.27 | Section 280G analysis and shareholder vote (if applicable, C-corp target) | Seller | [____] | [__/__/____] | |
| 19.28 | Oil and gas assignments and conveyances (if applicable) | Seller | [____] | [__/__/____] | Record in county deed records |
B. Buyer's Closing Deliverables
| # | Deliverable | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 20.1 | Purchase price payment (by wire transfer of immediately available funds) | Buyer | [____] | [__/__/____] | |
| 20.2 | Officer's certificate (re: reps, warranties, covenants) | Buyer | [____] | [__/__/____] | |
| 20.3 | Secretary's certificate (certificate of formation, bylaws/company agreement, resolutions, incumbency) | Buyer | [____] | [__/__/____] | |
| 20.4 | Certificate of Good Standing from Buyer's state of organization | Buyer | [____] | [__/__/____] | |
| 20.5 | Board/governing authority resolutions authorizing the transaction | Buyer | [____] | [__/__/____] | |
| 20.6 | Assumption Agreement (asset purchase) | Buyer | [____] | [__/__/____] | |
| 20.7 | Executed escrow agreement (if applicable) | Buyer | [____] | [__/__/____] | |
| 20.8 | Evidence of financing (executed credit agreement, funding confirmation) | Buyer | [____] | [__/__/____] | |
| 20.9 | Solvency certificate (if debt financing involved) | Buyer | [____] | [__/__/____] | |
| 20.10 | Legal opinion of Buyer's counsel (if required) | Buyer's Counsel | [____] | [__/__/____] | |
| 20.11 | Executed ancillary agreements (employment, TSA, non-compete) | Buyer | [____] | [__/__/____] |
C. Funds Flow and Payment
| # | Deliverable | Responsible | Status | Target Date | Notes |
|---|---|---|---|---|---|
| 21.1 | Funds flow memorandum executed by all parties | Both | [____] | [__/__/____] | |
| 21.2 | Wire transfer instructions confirmed | Both | [____] | [__/__/____] | |
| 21.3 | Escrow agent funding letter (if escrow) | Escrow Agent | [____] | [__/__/____] | |
| 21.4 | Payoff wires sent to Seller's lenders | Buyer | [____] | [__/__/____] | |
| 21.5 | Net purchase price wire sent to Seller | Buyer | [____] | [__/__/____] | |
| 21.6 | Working capital adjustment estimate delivered | Seller | [____] | [__/__/____] | |
| 21.7 | Transaction expense fund distributed | Both | [____] | [__/__/____] |
PART VII: POST-CLOSING CONDITIONS AND OBLIGATIONS
| # | Obligation | Responsible | Deadline | Status | Notes |
|---|---|---|---|---|---|
| 22.1 | Working capital true-up (per agreement timeline, typically 60-90 days) | Both | [__/__/____] | [____] | |
| 22.2 | Earnout payments (if applicable, per milestones) | Buyer | Per Agreement | [____] | |
| 22.3 | Post-closing purchase price adjustment | Both | [__/__/____] | [____] | |
| 22.4 | File Certificate of Merger (Form 622) with Texas Secretary of State (if not filed at closing) | Deal Counsel | [__/__/____] | [____] | |
| 22.5 | File updated franchise tax report/Public Information Report with Comptroller | Buyer | [__/__/____] | [____] | |
| 22.6 | Update sales tax permit with Comptroller | Buyer | [__/__/____] | [____] | |
| 22.7 | Record real property deeds and oil and gas conveyances with county clerk | Deal Counsel | [__/__/____] | [____] | |
| 22.8 | File P-4 transfer/new operator designation with Texas Railroad Commission (if O&G assets) | Buyer | [__/__/____] | [____] | |
| 22.9 | Customer/supplier notification letters sent | Buyer | [__/__/____] | [____] | |
| 22.10 | Employee benefit plan transitions completed | Buyer | [__/__/____] | [____] | |
| 22.11 | COBRA notices issued (if applicable) | Seller | [__/__/____] | [____] | |
| 22.12 | Tail insurance policies bound (D&O, E&O, cyber) | Seller | [__/__/____] | [____] | |
| 22.13 | Data room archived and access terminated | Both | [__/__/____] | [____] | |
| 22.14 | Transition services completed per TSA schedule | Both | Per TSA | [____] | |
| 22.15 | Indemnification claims (if any) submitted per agreement | Both | Per Agreement | [____] | |
| 22.16 | Escrow release (per escrow agreement timeline) | Escrow Agent | [__/__/____] | [____] | |
| 22.17 | Final closing binder assembled and distributed | Deal Counsel | [__/__/____] | [____] |
PART VIII: PRACTICE NOTES -- TEXAS-SPECIFIC
Key Texas Considerations
-
Two-Thirds Default Vote: Under BOC 21.457 (for corporations), the default vote for merger approval is two-thirds of the outstanding shares entitled to vote. However, the certificate of formation may reduce this to a majority (but not less than majority). Check the governing documents carefully.
-
Filing Office and Fee: Certificate of Merger (Form 622) is filed with the Texas Secretary of State, P.O. Box 13697, Austin, TX 78711-3697. The filing fee for a domestic for-profit corporation is $300. If the merger creates a new entity, the formation fee for that entity type must also be paid.
-
Franchise Tax Clearance: The Texas Secretary of State will not file a Certificate of Merger unless either (a) the certificate includes a statement that the surviving entity is responsible for the franchise tax obligations of each disappearing entity, or (b) a Certificate of Account Status (Form 05-359) from the Texas Comptroller is submitted. This is a hard requirement.
-
No State Income Tax: Texas does not impose a state personal or corporate income tax. However, the Texas franchise (margin) tax applies to most entities doing business in Texas (Tex. Tax Code Ch. 171). The no-tax-due threshold for 2024 reports is $2.47 million in annualized total revenue.
-
No Transfer Tax: Texas does not impose a state real property transfer tax or documentary stamp tax. This is a meaningful advantage for transactions involving significant real estate.
-
Short-Form Merger: BOC 10.006 allows a parent owning at least 90% of each class of a subsidiary to merge without subsidiary owner approval.
-
Dissenting Owner Rights: BOC 10.301-10.313 provides rights for dissenting owners to receive fair value. Notice and demand procedures must be strictly followed.
-
No Bulk Sales Act: Texas has repealed UCC Article 6 (Bulk Transfers). However, buyers should request a sales tax clearance letter from the Texas Comptroller to avoid successor liability for the seller's unpaid sales/use taxes under Tex. Tax Code 111.020.
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Non-Competition Agreements: Texas enforces non-competition agreements under Tex. Bus. & Com. Code 15.50-15.52. The agreement must be (a) ancillary to or part of an otherwise enforceable agreement, (b) reasonable in time, geographic area, and scope of activity, and (c) contain limitations that do not impose a greater restraint than necessary.
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Oil and Gas Considerations: For transactions involving oil and gas assets, additional items include: Texas Railroad Commission filings (P-4 Producer's Certificate of Compliance, P-5 Organization Report), oil production tax (4.6%) and natural gas production tax (7.5%) clearance, and assignment of operating agreements, joint operating agreements, and lease interests.
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Entity Terminology: The Texas BOC uses the term "domestic entity" and "ownership interest" rather than corporation-specific terms. The BOC applies uniformly to all entity types (corporations, LLCs, LPs, etc.).
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90-Day Delayed Effective Date: Texas allows a Certificate of Merger to specify a delayed effective date up to 90 days after filing (BOC 10.152), which is more generous than many states.
Common Pitfalls
- Failing to address franchise tax clearance before filing (Secretary of State will reject)
- Assuming majority shareholder vote is sufficient when default is two-thirds
- Not requesting Comptroller sales tax clearance letter in asset purchases
- Overlooking Texas Railroad Commission filings for oil and gas asset transfers
- Missing county-level ad valorem property tax clearance
- Not accounting for Texas's unique franchise (margin) tax when structuring consideration
- Failing to check whether entity is on the Comptroller's forfeiture list before closing
SOURCES AND REFERENCES
- Texas Business Organizations Code, Chapter 10 (Mergers): statutes.capitol.texas.gov
- Texas Secretary of State -- Mergers and Conversions FAQs: sos.state.tx.us
- Certificate of Merger Form 622: sos.state.tx.us
- Texas Secretary of State Fee Schedule: sos.state.tx.us
- Texas Comptroller -- Franchise Tax: comptroller.texas.gov
- Texas Comptroller -- Tax Certificates: comptroller.texas.gov
- Texas Non-Competition Law: Tex. Bus. & Com. Code 15.50-15.52
- Texas Dissenting Owner Rights: BOC 10.301-10.313
- Hart-Scott-Rodino Act, 15 U.S.C. 18a; 2025 thresholds: ftc.gov
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About This Template
Corporate documents govern how a company makes decisions, records them, and handles disputes between owners, directors, and officers. Proper corporate paperwork is what lets a business take advantage of limited liability, pass clean audits, and survive an acquisition or investor review. Skipping formalities like written resolutions and signed consents is one of the fastest ways for a business owner to lose personal asset protection.
Important Notice
This template is provided for informational purposes. It is not legal advice. We recommend having an attorney review any legal document before signing, especially for high-value or complex matters.
Last updated: March 2026