Delaware Certificate of Merger: Everything You Need to Know
A Delaware certificate of merger, also known as the articles of merger, is a document detailing the combination of two or more business entities into one business entity. 3 min read
Delaware Certificate of Merger Overview
A Delaware certificate of merger, also known as the articles of merger, is a document detailing the combination of two or more business entities into one business entity. The content of this document and the exact requirements for filing it vary between states, so it is important to be aware of the statutes governing business entities in the state you intend to merge in. In the case of Delaware, for instance, one issue to be aware of is that certificates of merger may be filed instead of merger agreements.
Conducting a Merger in Delaware
In order to conduct a merger in the state of Delaware, the following steps should be taken:
- Pre-clear your certificate of merger. To ensure the merger process goes as smoothly as possible, both parties should ensure that filing for their certificates of merger will occur on the same day–the date of closing–and that neither will be rejected for any reason. To best achieve this, take advantage of a pre-clearance review, if your state allows it. In Delaware, the Secretary of State’s Office offers this service for $250 for regular service, $350 for 24-hour service, and $500 for two-hour service.
- Obtain a good standing certificate. It is a good idea to make sure the business to be merged with has paid its franchise taxes, made no changes to its charter, and remains in good standing in general. A good standing certificate can help you do this. These can be obtained from the Delaware Secretary of State and can usually be obtained within 24 hours.
- Make franchise tax payments. Just as you should ensure that the other company has made their franchise tax payments, you should be sure that you have made these payments as well. Ideally, such payments should be made well in advance of a merger deal.
- Conduct due diligence on legal issues.Due diligence will help confirm that no judgments or material pending suits or liens are connected to the company in question. It may be a good idea to verify with the U.S. Copyright or Patent and Trademark offices that no intellectual property issues exist either.
- Assign process for business licenses and confirm status. Ensuring that the relevant business licenses will be properly applied by the date of the merger or soon after is also important. Documentation of such licenses, the timing of submission, and the manner of submission should all be confirmed. If not all of this can be confirmed by the date of the merger, it may be moved to the post-closing process.
- File the certificate of merger. Should the pre-merger process occur without any significant problems, filing the certificate of merger will occur on the date of the closing. To do this properly, you should coordinate with your service company representative to submit the certificate with clear instructions pertaining to the timing of submission and the confirmation of submission. Also, someone should be in close contact with the state if there is any filing issue that needs to be addressed quickly.
- Obtain a certified copy. Once the certificates of merger are submitted, you should obtain a certified copy from Delaware’s Secretary of State. This document will certify that the documents filed with the Delaware Division of Corporations are authentic. The certified copy will include the name of the filed document and the date on which it was filed, as well as the Secretary of State’s signature and the state official seal to ensure that it is authentic.
Advantage of Merging in Delaware
Merging with a company in Delaware may be an attractive proposition for many businesses because Delaware has some of the most business-friendly features in the country, including:
- The Delaware Court of Chancery, which is focused solely on settling business disputes.
- The ability for shareholders to act in writing rather than act through meetings.
- The ability for non-shareholders to serve on a business’s governing board.
- No requirement for a business to keep corporate records.
- No state income tax for business that do not do business in Delaware.
- No personal property or sales tax.
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