Virginia Code

Va. Code Ann. § 13.1-724 (2026)

Shareholder approval of certain dispositions

✓ current as of May 2026

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A. A sale, lease, exchange or other disposition of the corporation's assets, other than a disposition described in § 13.1-723, requires approval of the corporation's shareholders if the disposition would leave the corporation without a significant continuing business activity. The corporation will conclusively be deemed to have retained a significant continuing business activity if it retains a business activity that represented, for the corporation and its subsidiaries on a consolidated basis, (i) at least 20 percent of total assets at the end of the most recently completed fiscal year, and (ii) at least 20 percent of either (a) income from continuing operations before taxes or (b) revenues from continuing operations, in each case for the most recently completed fiscal year. The board of directors may base a determination under this subsection either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances. For any public corporation, reliance on the most recent financial statements that have been prepared in accordance with generally accepted accounting principles in the United States shall be deemed to be reasonable in the circumstances if the financial statements have been audited by independent certified public accountants whose certification does not include a going concern qualification.

B. A disposition that requires approval of the shareholders under subsection A shall be initiated by adoption of a resolution by the board of directors authorizing the disposition. After adoption of such a resolution, the board of directors shall submit the proposed disposition to the shareholders for their approval. The board of directors shall also submit to the shareholders a recommendation that the shareholders approve the proposed disposition, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors shall inform the shareholders of the basis for that determination.

C. The board of directors may set conditions for the approval of a disposition by the shareholders or the effectiveness of the disposition.

D. If a disposition is required to be approved by the shareholders and if the approval is to be sought at a shareholders' meeting, the corporation shall notify each shareholder, whether or not entitled to vote, of the shareholders' meeting at which the disposition is to be submitted for approval in accordance with § 13.1-658. The notice shall also state that the purpose, or one of the purposes, of the meeting is to consider the disposition and shall contain or be accompanied by a copy or summary of the agreement pursuant to which the disposition will be effected. If only a summary of the agreement is sent to shareholders, the corporation also shall send a copy of the agreement to any shareholder who requests it.

E. Unless the articles of incorporation or board of directors, acting pursuant to subsection C, requires a greater vote or a greater quorum, the approval of a disposition by the shareholders shall require at a meeting at which a quorum exists the approval of the holders of more than two-thirds of all the votes entitled to be cast on the disposition. The articles of incorporation may provide for a greater or lesser vote than that provided for in this subsection or a vote by separate voting groups so long as the vote provided for is not less than a majority of all the votes cast on the disposition by each voting group entitled to vote on the disposition at a meeting at which a quorum of the voting group exists.

F. Unless the parties to the disposition have agreed otherwise, after a disposition has been approved by the shareholders, and at any time before the disposition has been consummated, it may be abandoned without action by the shareholders, subject to any contractual rights of the parties to the disposition.

G. A disposition of assets in the course of dissolution under Article 16 (§ 13.1-742 et seq.) is not governed by this section.

H. The assets of a direct or indirect consolidated subsidiary shall be deemed to be the assets of the parent corporation for the purposes of this section.

I. Notwithstanding any other provision of this section, no corporation organized to conduct the business of a railroad or other public service or a banking business, or a savings institution, an industrial loan association or a credit union may sell, lease or exchange its properties for the conduct of such business in the Commonwealth except to a corporation of the Commonwealth organized for the same purpose or in the case of a bank to a savings and loan association or a corporation of the United States, and in the case of a savings and loan association to a bank or a corporation of the United States.

Code 1950, §§ 13-83, 13-84, 13.1-77; 1954, c. 499; 1956, c. 428; 1968, c. 109; 1971, Ex. Sess., c. 117; 1975, c. 500; 1985, c. 522; 1987, c. 181; 1996, c. 77; 2005, c. 765; 2019, c. 734; 2026, cc. 383, 892.

Notes of Decisions

Cited in 12 cases, 1987–2019 · leading case: May v. R.A. Yancey Lumber Corp., 822 S.E.2d 358 (Va. 2019).

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May v. R.A. Yancey Lumber Corp., 822 S.E.2d 358 (Va. 2019). · cites it 79× “The trial court erred in granting the Company's Special Plea in Bar and entering judgment against Sarah on the ground that the Proposed Transaction was not approved by the affirmative vote of more than two-thirds of the Company's shares as required by Va. Code § 13.1-724, nor…”

Willard v. Moneta Bldg. Supply, Inc., 515 S.E.2d 277 (Va. 1999). · cites it 16× “and Rose Mary failed to follow the procedures contained in subsection (B)(1) in two respects: (1) that the board of directors failed to communicate the "basis for its determination" that the proposed transaction would be submitted to the stockholders with no recommendation from…”

Barber v. VistaRMS, Inc., 634 S.E.2d 706 (Va. 2006). · cites it 2× “See Code § 13.1-724 and Code § 13.1-771 (referencing rights of a "shareholder").”

C-T of Virginia, Inc. v. Barrett (In Re C-T of Virginia, Inc.), 124 B.R. 694 (W.D. Va. 1990). · cites it 3× “By contrast, corporate sales of assets *697 are governed by Va.Code § 13.1-724, which recognizes that some sales of assets may constitute distributions, and mandates compliance with the distribution statute.”

WBM, LLC v. Wildwoods Holding Corp., 613 S.E.2d 402 (Va. 2005). · cites it 4× “" Thus, WBM says, the sale could be made pursuant to Code § 13.1-723 "on the terms and conditions and for the consideration determined by the board of directors" without the formalities required by Code § 13.”

United States v. Brandon, 651 F. Supp. 323 (W.D. Va. 1987). “Code §§ 13.1-724,853 (1985). Although a corporation may have ownership rights separate from its stockholders, it is the directors and stockholders who control and exercise those rights.”

Dawyot v. Catawba Capital Mgmt., Inc., 82 Va. Cir. 521 (Roanoke County Cir. Ct. 2011). · cites it 16× “*528 Third, Catawba also claims that § 8 of the Redemption Agreement violates Virginia Code § 13.1-724. In pertinent part, Virginia Code § 13.”

C-T of Virginia, Inc. v. Barrett (In re C-T of Virginia, Inc.), 958 F.2d 606 (4th Cir. 1992). “The court found application of the restriction on distributions “inconsistent with Virginia’s statutory scheme,” because the merger provisions of the Virginia Stock Corporation Act — unlike the sale of corporate assets provisions, see Va.Code Ann. § 13.1-724 (Michie 1989) —…”

Willard ex rel. Moneta Bldg. Supply, Inc. v. Moneta Bldg. Supply, Inc., 50 Va. Cir. 558 (Bedford Cir. Ct. 1998). · cites it 16× “Va. Code § 13.1-724 Count I alleges that defendants A.”

Stickley v. Stickley, 43 Va. Cir. 123 (Rockingham Cir. Ct. 1997). “1-747 of the Code of Virginia, or, in the alternative, that a sale of virtually all of the corporate operating assets in 1995 be determined to be a sale of substantially all of die corporation’s property pursuant to §§ 13.1-724 and 13.1-730 of the Code of Virginia, thus…”

Roscigno v. DeVille, 28 Va. Cir. 96 (Fairfax Cir. Ct. 1992). · cites it 3× “Section 13.1-724 concerns the sale of substantially all of a corporation’s assets other than in the usual and regular course of business, subject to the proposed transaction being adopted by the board of directors and approved by the shareholders.”

Fisher v. Tails, Inc. (Va. 2015). “Consummation of a disposition of assets pursuant to § 13.1-724 if the shareholder is entitled to vote on the disposition; 4.”

— Va. Code Ann. § 13.1-724(A) — 4 cases

May v. R.A. Yancey Lumber Corp., 822 S.E.2d 358 (Va. 2019). “The trial court erred in granting the Company's Special Plea in Bar and entering judgment against Sarah on the ground that the Proposed Transaction was not approved by the affirmative vote of more than two-thirds of the Company's shares as required by Va. Code § 13.1-724, nor…”

WBM, LLC v. Wildwoods Holding Corp., 613 S.E.2d 402 (Va. 2005). “" Thus, WBM says, the sale could be made pursuant to Code § 13.1-723 "on the terms and conditions and for the consideration determined by the board of directors" without the formalities required by Code § 13.”

Dawyot v. Catawba Capital Mgmt., Inc., 82 Va. Cir. 521 (Roanoke County Cir. Ct. 2011). “*528 Third, Catawba also claims that § 8 of the Redemption Agreement violates Virginia Code § 13.1-724. In pertinent part, Virginia Code § 13.”

Willard ex rel. Moneta Bldg. Supply, Inc. v. Moneta Bldg. Supply, Inc., 50 Va. Cir. 558 (Bedford Cir. Ct. 1998). “Va. Code § 13.1-724 Count I alleges that defendants A.”

— Va. Code Ann. § 13.1-724(B)(1) — 2 cases

Willard v. Moneta Bldg. Supply, Inc., 515 S.E.2d 277 (Va. 1999). “and Rose Mary failed to follow the procedures contained in subsection (B)(1) in two respects: (1) that the board of directors failed to communicate the "basis for its determination" that the proposed transaction would be submitted to the stockholders with no recommendation from…”

Willard ex rel. Moneta Bldg. Supply, Inc. v. Moneta Bldg. Supply, Inc., 50 Va. Cir. 558 (Bedford Cir. Ct. 1998). “Va. Code § 13.1-724 Count I alleges that defendants A.”

— Va. Code Ann. § 13.1-724(E) — 2 cases

Willard ex rel. Moneta Bldg. Supply, Inc. v. Moneta Bldg. Supply, Inc., 50 Va. Cir. 558 (Bedford Cir. Ct. 1998). “Va. Code § 13.1-724 Count I alleges that defendants A.”

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