Streamlining Corporate Name Changes: An Alternative Path for Public Companies
Author: Destiny Aigbe
November 4, 2024
For public companies looking to change their name, navigating the traditional process of amending articles of incorporation can be time-consuming and expensive, especially given the shareholder approval and SEC requirements under the Securities Exchange Act of 1934. However, an alternative approach available in some states—using a subsidiary merger—allows companies to expedite the name change without direct shareholder consent.
Traditional Name Change Process
Under standard rules, a name change requires amending the articles of incorporation, which often involves holding shareholder meetings or obtaining written consent. For companies subject to the reporting requirements of the Exchange Act, any solicitation of shareholder votes necessitates compliance with SEC proxy disclosure rules, usually involving Schedule 14A or 14C forms.
Using a Subsidiary for a Simplified Name Change
In states like Delaware and Nevada, companies can create a wholly-owned subsidiary under the desired new name and execute a short-form merger. Here, the parent company adopts the subsidiary's name and avoids the traditional shareholder approval route. For companies subject to SEC reporting requirements, a Form 8-K is typically filed to disclose the name change.
Steps include:
- Gaining board approval for forming a subsidiary.
- Creating a new subsidiary under the desired name.
- Merging the subsidiary into the parent company, with the parent adopting the subsidiary’s name.
- Obtaining a new CUSIP number.
- Notifying FINRA of the corporate action for an OTC markets update.
State Provisions in Delaware and Nevada
In Delaware, DGCL Section 251 allows a parent-subsidiary merger without shareholder approval if the parent holds at least 80% of the subsidiary. Similarly, Nevada's NRS 92A.180 allows this type of merger if the parent owns at least 90% of the subsidiary, permitting only amendments to the corporate name during the merger.
This approach provides an efficient pathway for companies to rebrand or align with new corporate identities without the additional expenses of traditional name change protocols.
About the Author
Destiny Aigbe
Managing Partner
Aigbe Law PLLC | Dark Alpha Capital
A Corporate and Securities Law Firm
With a robust foundation in law and finance, Destiny Aigbe has carved a distinguished career, underpinned by his pivotal role in orchestrating and managing complex transactions that have propelled companies to significant growth and market prominence. As a seasoned attorney and strategic advisor, Destiny has been instrumental in facilitating over $75 million in capital raises, demonstrating a keen acumen for securing funding and fostering investor confidence.
Destiny's leadership in the execution of six successful public listings, through meticulously structured reverse mergers and registration statements, showcases his adeptness in navigating the intricacies of the public markets and his capacity to guide companies through transformative growth phases. His involvement in five mergers as an operator further illustrates his versatile skill set, extending beyond legal expertise to include hands-on management and operational strategy, though these ventures did not involve funding.
Destiny's professional journey is marked by a commitment to excellence and a diverse range of experiences, from representing a wide spectrum of clients including public and private companies, and investment firms, to holding significant roles within the US government. His tenure with the US Department of State and the National Institutes of Health highlights his adaptability and his contribution to the advancement of entrepreneurial ventures in sectors like biotechnology and nanotechnology through strategic funding initiatives.
An alumnus of Vanderbilt University Law School, Destiny focused on Finance and Mergers & Acquisitions, further honing his expertise with a certificate in Law and Business. His foundational education in Finance was obtained with honors from the University of Maryland's Robert H. Smith School of Business, which laid the groundwork for his subsequent achievements in investment banking and legal practice.
Residing in the Washington, D.C. area, Destiny Aigbe continues to leverage his extensive experience and insightful leadership to drive innovation, growth, and success for his clients and the ventures he is involved with.
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