California broadly authorizes a corporation to sell, lease, convey, exchange, transfer or otherwise dispose of all or substantially all of its assets when the principal terms have been approved by the board. If the sales is not in the usual and regular course of business, the principal terms must also be approved by the outstanding shares. Cal. Corp. Code § 1001(a). For a discussion of the meaning of “approved by the outstanding shares”, see this post from last week.

If the acquiring party is in control of or under common control with the disposing corporation, then the principal terms of the sale must be approved by at least 90% of the voting power of the disposing corporation. Cal. Corp. Code § 1001(d). The term “voting power” is defined to mean the power to vote for the election of directors at the time any determination of voting power is to be made and does not include the right to vote upon the happening of some condition or event that has not yet occurred. Cal. Corp. Code § 194.5. The statute includes a special rule when different classes of shares are entitled to vote as separate classes for different members of the board. The point of this requirement is analogous to other provisions in the California General Corporation Law that are intended to prevent cashing out of minority shareholders (Sections 1101 and 407). The 90% threshold is the same that required to effect a short-form merger (Section 1110).