"All or Substantially All" in an Asset Disposition

by Practical Law Corporate & Securities

A Practice Note analyzing the meaning of the phrase "all or substantially all" in the context of corporate asset dispositions, a crucial determination for whether a transaction requires stockholder approval. This Practice Note focuses on the interpretation of this standard under Delaware and New York law, specifically referencing the Delaware General Corporation Law (DGCL) § 271 and the New York Business Corporation Law (NYBCL) § 909. As these statutes do not define the phrase, this resource examines the subjective, fact-specific inquiries that courts employ, including the quantitative value, qualitative value, and ordinary course of business tests. This Practice Note provides guidance on how these tests are applied to a single asset disposition and explains how courts may use the step-transaction doctrine to aggregate a series of otherwise distinct asset sales. It also contrasts this framework with the "significant continuing business activity" standard used by the Model Business Corporation Act (MBCA) and adopted by certain states.