8. Merger, Consolidation, and Acquisition

The plan of merger or consolidation shall set forth the ff:

• The names of the constituent corporations;
• The terms of the merger or consolidation and the mode of carrying the same into effect;
• A statement of the changes, if any, in the articles of incorporation of the surviving corporation in case of merger; and, in case of consolidation, all the statements required to be set forth in the articles of incorporation for corporations organized under this Code; and
• Such other provisions with respect to the proposed merger or consolidation as are deemed necessary or desirable.

Note: The plan of merger has to be approved by majority of the board of each constituent corporation; it has to be approved by affirmative vote of stockholders representing ⅔ of the outstanding capital stock or ⅔ of the members in case of a non-stock corporation.

Articles of Merger or Consolidation (Sec. 78)

Articles of Merger or Consolidation (Sec. 77)

The articles must be signed by the president or vice president and certified by the secretary or assistant secretary setting forth:

• The plan of the merger or the plan of consolidation;
• As to stock corporations, the number of shares outstanding, or in the case of nonstock corporations, the number of members;
• As to each corporation, the number of shares or members voting for or against such plan, respectively;
• The carrying amounts and fair values of the assets and liabilities of the respective companies as of the agreed cut-off date;
• The method to be used in the merger or consolidation of accounts of the companies;
• The provisional or pro-forma values, as merged or consolidated, using the accounting method; and
• Such other information as may be prescribed by the SEC.

Procedure of Consolidation or Merger

STEP 1: Drawing up of the Plan of Merger or Consolidation (Sec. 75)

The board of constituent corporations shall draw up a plan of merger or consolidation. It shall contain the following:

• The names of the constituent corporations;
• The terms of the merger or consolidation and the mode of carrying the same into effect;
• A statement of the changes, if any, in the articles of incorporation of the surviving corporation in case of merger; and, in case of consolidation, all the statements required to be set forth in the articles of incorporation for corporations organized under this Code; and
• Such other provisions with respect to the proposed merger or consolidation as are deemed necessary or desirable.

STEP 2: Board Approval (Sec. 75)

The plan of merger or consolidation shall be approved by a majority vote of the board of directors or trustees of each constituent corporation, then submitted to the stockholders or members of each corporation at separate corporate meetings duly called for the purpose;

STEP 3: Stockholders’ or Members’ Approval (Sec. 76)

• Notice of such meetings shall be given to all stockholders or members in the same manner as notice of regular or special meetings under Section 49. The notice shall state the purpose of the meeting and include a copy or summary of the plan of merger or consolidation.
• The plan has to be approved by a vote of stockholders representing ⅔ of the outstanding capital stock, if a stock corporation, or ⅔ of the members of the non- stock corporation.
• Dissenting stockholders may exercise their right of appraisal. However, if the board abandons the plan, such right is extinguished.
• Any amendment to the plan must be approved by the same votes of the board members or trustees and stockholders or members required for the original plan.

STEP 4: Articles of Merger or Consolidation (Sec. 77)

Once the required number of stockholders or members approved of the plan, Articles of Merger or Articles of Consolidation shall be executed by each of the constituent corporations, to be signed by the president or vice-president and certified by the secretary or assistant secretary of each corporation, setting forth:

• The plan of the merger or the plan of consolidation;
• As to stock corporations, the number of shares outstanding, or in the case of non-stock corporations, the number of members;
• As to each corporation, the number of shares or members voting for or against such plan, respectively;
• The carrying amounts and fair values of the assets and liabilities of the respective companies as of the agreed cut-off date;
• The method to be used in the merger or consolidation of accounts of the companies;
• The provisional or pro-forma values, as merged or consolidated, using the accounting method; and
• Such other information as may be prescribed by the SEC.

STEP 5: Approval by the SEC

The Articles of Merger or Articles of Consolidation shall be submitted to the SEC for approval. However, in the case of special corporations, like banks, insurance companies, building and loan associations, etc., the favorable recommendation of the appropriate government agency shall first be obtained.

• If the SEC is satisfied that the merger or consolidation of the corporations concerned is legal, it shall issue a certificate of merger or of consolidation, at which time the merger or consolidation shall be effective.
• If the SEC is not satisfied, it shall set a hearing to give the corporations concerned the opportunity to be heard. Written notice of the date, time and place of hearing shall be given to each constituent corporation at least two (2) weeks before said hearing.