Contracts Asset Purchase Law & Legal Definition
A sale of all or substantially all corporate assets is authorized by statute in most jurisdictions, and the procedures and requirements set forth in the applicable statutes must be complied with. Such a sale, usually having the effect of rendering the corporation unable to accomplish its corporate purpose, is to be distinguished from other sales that may be regarded as occurring in the normal course of business and to which the statutes are usually not applicable.
Typical requirements for a sale of all or substantially all corporate assets include appropriate action by the directors establishing the need for and directing the sale, and approval by a prescribed number or percentage of the shareholders. The terms of the sales agreement must be drafted so as to evidence fairness to all parties, especially creditors and dissenting shareholders, and to provide for a fair and adequate consideration. Sales of corporate assets may take place pursuant to a number of different types of transactions, including mergers, consolidations, reorganizations, and the like.
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