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HomeCorporations CodeGENERAL PROVISIONSCh. 6Art. 5§ 18380 Merger Effects On Entities

§ 18380 Merger Effects On Entities

Corporations Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 18380 Merger Effects On Entities

When two groups combine, the one that disappears stops existing, and the one that stays gets all the disappearing group's stuff, rights, and debts.

Key Takeaways

  • •The disappearing entity ceases to exist.
  • •The surviving entity automatically gets all rights, property, and debts of the disappearing entity.
  • •Creditors keep their rights and liens, but a lien can only cover the property that was already under lien before the merger.
  • •Ongoing lawsuits continue and bind the surviving entity, or the surviving entity can be sued in place of the disappearing one.
  • •A merger does not change personal liability of members, directors, officers, or agents of an unincorporated group.

Example

Company A merges with Company B, and Company B is the disappearing entity.

After the merger, Company B no longer exists. Company A now owns everything B owned, and Company A also has to pay all of B's debts. Any lawsuits that were against B keep going, but now they are against A.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 18380 Merger Effects On Entities

(a) A merger pursuant to this article has the following effect: (1) The separate existence of the disappearing entity ceases. (2) The surviving entity succeeds, without other transfer, to the rights and property of the disappearing entity. (3) The surviving entity is subject to all the debts and liabilities of the disappearing entity. A trust or other obligation governing property of the disappearing entity applies as if it were incurred by the surviving entity. (b) All rights of creditors and all liens on or arising from the property of each of the constituent entities are preserved unimpaired, provided that a lien on property of a disappearing entity is limited to the property subject to the lien immediately before the merger is effective. (c) An action or proceeding pending by or against a disappearing entity or other party to the merger may be prosecuted to judgment, which shall bind the surviving entity, or the surviving entity may be proceeded against or substituted in its place. (d) A merger does not affect an existing liability of a member, director, officer, or agent of a constituent unincorporated association for an obligation of the unincorporated association. (Added by Stats. 2005, Ch. 116, Sec. 5. Effective January 1, 2006.)

Last verified: January 10, 2026

Key Terms

mergerdisappearing entitysurviving entityrights and property

Related Statutes

  • § 18390 Merger Property Ownership Evidence
  • § 18400 Surviving Entity Gift Continuity
  • § 18360 Unincorporated Association Mergers
  • § 1107.5 Corporate Merger Tax Liability
  • § 17710.18 Property Transfer In Mergers

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Corporations Code. Section 18380.
View Official Source