Merger
A TBOC-authorized transaction in which entities combine, or one entity divides, and property and liabilities vest in one or more surviving or new organizations by operation of law. In the common two-party merger, one entity survives and takes the other's property and liabilities.
A merger is a TBOC-authorized transaction in which two or more entities combine, with one entity surviving and the other entity (or entities) merging into the survivor. Texas also treats as a merger the division of one entity into two or more entities and a combination with more than one surviving or new entity (§ 1.002(55)). Property and liabilities vest in the surviving or new organizations as the plan of merger allocates them, without any transfer or assignment (§ 10.008(a)(2)-(3)).
Plan of merger (§ 10.002)
Must specify the names of the merging entities, the surviving entity, the organizational form and jurisdiction of each party, the manner and basis of converting or canceling ownership interests, and the certificate of formation of each new filing entity the plan creates. Amendments to a surviving entity's certificate of formation are optional (§ 10.004(a)(1)).
Approval requirements for corporations (§§ 21.452, 21.457)
A Texas corporation that is a party to a merger generally needs (1) a board resolution approving the plan and (2) shareholder approval by at least two-thirds of the outstanding shares entitled to vote (§§ 21.452, 21.457(a)). The certificate of formation may set a lower vote, but not less than a majority (§ 21.365(a)). Unless the certificate of formation requires one, no shareholder vote is needed for certain mergers in which the corporation survives with limited dilution, or for holding-company and short-form mergers (§ 21.459(a)-(b)).
Class voting (§ 21.458)
Class voting on mergers is governed by § 21.458, subject to the SB 29 waiver authority under § 21.365(b)(2) (eff. May 14, 2025) permitting Texas corporations to waive separate class voting in their certificates of formation. See Class Voting.
Short-form mergers (§ 10.006)
A parent organization owning at least 90 percent of the outstanding ownership interests of each class and series of a subsidiary may merge with the subsidiary without any action by the subsidiary. If the parent survives, a resolution of the parent's governing authority is enough (§ 10.006(a), (b), (d)). Owners whose interests are converted or exchanged may have appraisal rights (§ 10.354(a)(1)(E)).
Effect of merger (§ 10.008)
On the effective date: (1) the merging entity ceases to exist; (2) the surviving entity continues; (3) property and liabilities vest in the surviving or new organizations as the plan of merger allocates them, without any further deed or assignment; (4) a pending proceeding may continue as if the merger had not occurred, or the organization that received the related asset or liability may be substituted.
Dissenters' rights
Texas corporate shareholders have statutory dissenters' rights in certain mergers under §§ 10.351–10.368, which let a shareholder who follows the statutory procedure obtain the fair value of the shares through appraisal (§ 10.354(a)). The right is unavailable in many mergers where the shares are listed on a national securities exchange or held of record by at least 2,000 owners (§ 10.354(b)).
A merger is commonly used for combinations of operating businesses where the buyer wants to acquire the entire business as a going concern with all assets and liabilities transferred by operation of law (rather than through individual asset transfers).