(a)The authorization or consent of stockholders to the mortgage or pledge of a corporation’s property and assets shall not be necessary, except to the extent that the certificate of incorporation otherwise provides.
(b)Without limiting the rights of a secured party under applicable law, no resolution by stockholders shall be required by § 271(a) of this title for a sale, lease or exchange of property or assets if such property or assets are collateral that secures a mortgage or are pledged to a secured party and either:
(1)The secured party exercises its rights under the law governing such mortgage or pledge or other applicable law, whether under Article 9 of a Uniform Commercial Code [§ 9-101 et seq. of Title 6], a real property law or other law, to effect such sale, lease or exchang
Free access — add to your briefcase to read the full text and ask questions with AI
(a) The authorization or consent of stockholders to the mortgage or pledge of a corporation’s property and assets shall not be necessary, except to the extent that the certificate of incorporation otherwise provides.
(b) Without limiting the rights of a secured party under applicable law, no resolution by stockholders shall be required by § 271(a) of this title for a sale, lease or exchange of property or assets if such property or assets are collateral that secures a mortgage or are pledged to a secured party and either:
(1) The secured party exercises its rights under the law governing such mortgage or pledge or other applicable law, whether under Article 9 of a Uniform Commercial Code [§ 9-101 et seq. of Title 6], a real property law or other law, to effect such sale, lease or exchange without the consent of the corporation; or
(2) In lieu of the secured party exercising such rights, the board of directors of the corporation authorizes an alternative sale, lease or exchange of such property or assets, whether with the secured party or with another person, that results in the reduction or elimination of the total liabilities or obligations secured by such property or assets, provided that (i) the value of such property or assets is less than or equal to the total amount of such liabilities or obligations being eliminated or reduced and (ii) such sale, lease or exchange is not prohibited by the law governing such mortgage or pledge. The provision of consideration to the corporation or to its stockholders shall not create a presumption that the value of such property or assets is greater than the total amount of such liabilities or obligations being eliminated or reduced.
(c) A failure to satisfy the proviso in paragraph (b)(2)(i) of this section shall not result in the invalidation of a sale, lease or exchange if the transferee of the property or assets provided value therefor (which may include the reduction or elimination of the total liabilities or obligations secured by such property or assets) and acted in “good-faith” (as defined in § 1-201(b) of Title 6). The preceding sentence shall not apply to a proceeding against the corporation and any other necessary parties to enjoin such sale, lease or exchange before the consummation thereof and shall not eliminate any liability for monetary damages for any claim, including a claim in the right of the corporation, based upon a violation of fiduciary duty by a current or former director or officer or stockholder.
(d) A provision of the certificate of incorporation that requires the authorization or consent of stockholders for a sale, lease or exchange of property or assets shall not apply to a transaction permitted by subsection (b) of this section unless such provision expressly so requires; provided that this subsection (d) shall apply only to certificate of incorporation provisions that first become effective on or after August 1, 2023.