dissolutionmerger

Dissolution merger is a form of corporate reorganization in which one or more corporations cease to exist as separate entities and are combined into a surviving or newly formed corporation through a merger or consolidation. The term emphasizes the dissolution of the merging entities as part of the process, with their assets and liabilities transferred to the surviving company. In practice it can take the form of a statutory merger (one entity survives) or a statutory consolidation (a new entity is formed and all dissolving entities merge into it). The dissolution of the merging entities is not complete until the surviving or new entity is created and the transfer of assets and liabilities is effected.

Process typically begins with a plan of merger, followed by approvals from the boards of the involved corporations and, where required, the shareholders. The merger agreement and any accompanying plan of dissolution are drafted and executed, and required filings—such as articles of merger or articles of consolidation—are submitted to the relevant government authority. Creditors are notified, and the dissolved entities wind up their affairs. After completion, the surviving or new entity continues operations, and assets, contracts, and liabilities flow to it, with employees and operations generally transferring accordingly.

Legal effects usually include the continuation of the surviving entity notwithstanding the dissolution of others; all valid contracts and obligations may become the responsibility of the surviving entity. Depending on jurisdiction and structure, there may be successor liability, employment considerations, and regulatory or antitrust requirements. Tax implications vary by jurisdiction and structure, and may include tax-free reorganizations if specific conditions are met.