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Subsidiary and parent company mergers

Businesses in Florida may choose to merge with, acquire or be acquired by other companies in many situations. However, these mergers do not always have to happen between totally distinct organizations. In fact, many times companies with subsidiaries may choose to initiate mergers involving these subsidiaries and the parent companies.

The Florida Statutes explains that some mergers between parent corporations and their wholly owned subsidiaries may not even require the vote or approval of shareholders. One of the factors that may influence whether or not such a vote is needed is what the articles of incorporation will be for the newly formed and merged company. If these are not to be different from the original parent company's articles of incorporation, the vote may be able to be avoided.

For companies that own at least 80 percent of the stock in a company, mergers may happen between two or more subsidiaries. They may also merge a parent company into a subsidiary or a subsidiary into a parent company. In these mergers, a plan must be provided about how the stock from both separate companies will be put together into the one new company. Special considerations will be required to be addressed if a subsidiary company absorbs what had been its parent company originally.

If you would like to learn more about the different ways in which mergers may take place between parent companies and their subsidiaries, please feel free to visit the subsidiary merger page of our Florida business and corporate law website.

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