Prepare the facts for an asset sale's corporate-approval review

Give counsel a description of the property being sold, leased or exchanged and what the company will retain afterward. Include the draft agreement and asset schedules. The approval question can depend on the transaction as a whole, so an equipment list without the surrounding business facts may be inadequate.

Delaware section 271 addresses transactions involving all or substantially all corporate property and assets and specifies an approval framework. Whether a particular transaction falls within that rule requires legal analysis. Do not use a self-selected asset percentage as an automatic safe harbor.

Prepare a factual account of the operations, personnel, contracts and assets that remain with the corporation. Identify whether the disposal removes an entire activity or leaves an operating business capable of continuing. Use existing records and distinguish current facts from management's plans.

Include subsidiaries and related steps in the transaction. Section 271 contains provisions concerning wholly owned and controlled subsidiaries and transfers to subsidiaries. Give counsel the actual ownership structure rather than assuming an affiliate has the statutory status required for an exception.

Supply the current charter, bylaws, relevant investor agreements and existing debt or other contracts that may require consent. Ask counsel to identify corporate votes and separate contractual approvals. A lender's consent and a stockholder vote answer different questions even when both are conditions to closing.

Create an approval schedule naming the decision-maker, exact proposed action, required evidence and sequence. Keep class or series votes and any special contractual rights visible. The administrator should use counsel's confirmed requirements rather than infer authority from who attended the transaction discussions.

Circulate the final proposed terms and exhibits with the required board and stockholder materials. Record which agreement version each approval covers. If the assets, consideration or other material terms change, ask counsel whether earlier approvals remain sufficient before releasing the revised deal.

Section 271 also addresses abandonment of an approved transaction, subject to contractual rights. If the company decides not to proceed, record that decision and have counsel review the contract consequences. Corporate authorization to sell should remain distinct from a completed sale or a contractual right to walk away.

Store counsel's instructions, the factual packet, executed approvals and final transaction documents together. If counsel concludes that a particular statutory vote is not required, preserve the advice in the appropriate restricted location and keep the administrative implementation instructions accessible.

After closing, compare the assets actually transferred with the approved schedule and flag differences for counsel. The company record should establish which transaction was authorized and which transaction occurred. Any remaining consent or post-closing transfer document should stay open with a named owner.