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Simple English definitions for legal terms
short-form merger
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A quick definition of short-form merger:
A short-form merger is when a big company that already owns most of a smaller company's shares decides to merge with it. This is a quicker and cheaper way to merge than the usual way. The big company just needs to make a plan, send it to the smaller company's shareholders, and file some paperwork. Then they become one company.A more thorough explanation:
A short-form merger is a type of merger that is less expensive and time-consuming than an ordinary merger. It is usually allowed when a subsidiary merges into a parent that already owns most of the subsidiary's shares. This type of merger is generally accomplished when the parent adopts a merger resolution, mails a copy of the plan to the subsidiary's record shareholders, and files the executed articles of merger with the secretary of state, who issues a certificate of merger.
For example, if Company A owns 90% of the shares of Company B, Company A can use a short-form merger to acquire the remaining 10% of Company B's shares without going through the lengthy and expensive process of a regular merger.
Short-form mergers are beneficial for companies because they save time and money. However, they can be controversial because minority shareholders may feel that they are being forced to sell their shares without receiving a fair price.