No requirement of shareholder approval for the sale of an integral part of a corporation exists in N.Y. Bus. Corp. Law § 909; the "integral part" formulation has been expressly deleted.
The corporation made plans, pursuant to an order of the Federal Trade Commission, to sell one of its subsidiaries. When the company failed to seek shareholder approval of the proposed sale, the shareholder filed an action against the corporation contending that management had acted improperly in contemplating the sale without shareholder approval, under N.Y. Bus. Corp. Law § 909, and that the proceeds of such sale should have been paid to the shareholders. The corporation filed a motion for summary judgment dismissing the complaint.
Was the contemplated transaction invalid without prior shareholder approval?
The court found in the corporation's favor, finding that it had acted properly pursuant to the statute, and that the remaining allegations of the complaint were inadequate to sustain a claim for relief. Moreover, the complaint was premature because the sale had not been consummated, and thus no determination had yet been made as to the use of the proceeds.