Form 623 – Parent-Subsidiary Certificate of Merger – Business Organizations Code

Jurisdiction: Country: United States | Province or State: Texas

What is a Form 623 – Parent-Subsidiary Certificate of Merger – Business Organizations Code?

Form 623 is the Texas Secretary of State’s short-form certificate of merger for a parent-subsidiary merger. You use it when a parent entity owns at least 90% of the outstanding ownership or voting power of each class of a subsidiary’s interests. This form allows you to complete the merger without obtaining subsidiary owner approval. In practical terms, it is the streamlined path to merge a subsidiary into its parent (or into another wholly controlled subsidiary) under the Texas Business Organizations Code.

Who typically uses this form?

In-house counsel, outside corporate counsel, corporate secretaries, and founders or business owners who hold operating companies in a holding company structure. It is common in private equity roll-ups, family-owned groups consolidating entities, and corporate reorganizations where entities have become redundant.

You need this form when you have at least 90% ownership of a subsidiary and want to combine entities with minimal procedural hurdles. Short-form mergers reduce internal approvals and paperwork. You do not have to run a formal owner vote in the subsidiary. The parent authorizes the merger and signs the certificate, subject to the parent’s own governance rules.

Typical usage scenarios

• You run a Texas holding company that owns 100% of a Texas LLC that no longer has operations. You want to merge it into the parent to simplify taxes, cut annual fees, and eliminate a separate bank account and compliance calendar. Form 623 provides the filing to achieve that result.

• A Texas corporation owns 95% of a Texas subsidiary with a handful of minority holders. You want to eliminate the subsidiary as a stand-alone entity and consolidate assets and contracts into the parent. You can do a short-form merger, convert the minority’s interests according to a plan of merger, and file Form 623 to make the merger effective.

• Your parent LLC owns several Texas subsidiaries. You want to merge all three subsidiaries into the parent in one filing. Form 623 can cover multiple subsidiaries as long as the parent meets the 90% ownership threshold for each one.

• You are reorganizing for future financing. Investors prefer a single operating entity. You use a short-form merger to combine subsidiaries into the main operating entity before closing, using Form 623 to implement the merger in Texas records.

In short, Form 623 is the Texas filing that actually affects the short-form parent-subsidiary merger. Once filed and effective, the non-surviving subsidiary ceases to exist, and all of its assets and liabilities move to the surviving entity by operation of law.

When Would You Use a Form 623 – Parent-Subsidiary Certificate of Merger – Business Organizations Code?

You use Form 623 when you qualify for a short-form merger in Texas. The key qualifier is ownership: the parent must own at least 90% of each class of the subsidiary’s outstanding ownership interests or voting shares. If you do not meet that threshold, you generally cannot use the short-form path and must use a standard merger process that involves formal owner approvals. If you do meet the threshold, Form 623 is the Texas filing for the merger.

You would use it when simplifying a group structure. For example, if you formed special-purpose subsidiaries for separate lines of business and later decide to combine them, a short-form merger can consolidate balance sheets and reduce annual filings. You would also use it when retiring shell entities after an asset sale, or when moving intellectual property or licenses into a main entity as part of a reorganization.

Business owners, general counsel, and controllers use this form during year-end clean-up, post-acquisition integration, and pre-financing restructurings. It also appears in corporate separations where non-core subsidiaries return to the parent before a spin-off. Transactional attorneys rely on it to reduce approvals and timing risk. Because the short-form does not require a subsidiary-level vote, you avoid delays from dispersed minority owners. You still address their interests through the plan of merger, but you do not need their consent to file.

You also use Form 623 when a Texas entity is involved, and Texas must record the merger. If the surviving entity is Texas-organized, Texas must file the certificate to make the merger effective. If the survivor is foreign but a Texas entity will not survive, you file in Texas to terminate the Texas entity through the merger, and if the survivor will conduct business in Texas, you handle its Texas registration as a foreign entity. In other words, if the result affects a Texas filing entity’s status, Form 623 is in play.

Professional and regulated entities may use this form if they meet the 90% standard, but they should expect extra steps. For example, if an entity’s governing law or regulator requires pre-approval for mergers, you obtain those approvals first. The short-form pathway does not override those sector rules. It only streamlines corporate-level approvals.

Legal Characteristics of the Form 623 – Parent-Subsidiary Certificate of Merger – Business Organizations Code

Form 623 is the instrument that makes a short-form merger legally effective under Texas law. It is legally binding because it records the merger in the state’s public registry, shows that statutory conditions are met, and confirms that the parent approved the plan of merger through proper governance. Upon the listed effective date and time, title to all assets, contracts, and property of each non-surviving subsidiary automatically vests in the surviving entity. Likewise, all debts, obligations, and liabilities attach to the survivor without the need for separate assignments, novations, or deeds, unless a contract or regulator demands a specific consent or notice.

Enforceability comes from strict compliance with the Business Organizations Code and the Secretary of State’s filing requirements. The 90% ownership requirement is fundamental. The certificate must accurately identify all parties, their Texas file numbers, the survivor, any amendments to the survivor’s governing documents, and the effective date. The signer must be authorized. You must attach any required tax clearance for a Texas taxable entity that will not survive. If the filing is accepted and the fee is paid, the Secretary of State issues evidence of filing, and the merger takes effect as stated.

Short-form mergers affect ownership rights. The plan of merger sets how outstanding interests convert into survivor interests, cash, or other consideration. Minority owners of a subsidiary in a short-form merger do not vote on the merger, but they may have appraisal or dissenters’ rights depending on entity type and the consideration offered. Those rights, if available, are handled outside the filing and must follow statutory procedures and timelines. As the filer, you should build that process into your plan and notices.

The merger can amend the survivor’s governing documents, change the survivor’s name, and update its principal office. Those changes occur on the effective date if you include them in the certificate. If the survivor is foreign and will continue business in Texas, it must be registered to transact business, and its Texas registration details must align with the merger record.

Finally, the certificate’s statements carry legal consequences. Misstatements can void the filing or expose the signer and the entities to penalties or claims. Accuracy is essential. Keep the plan of merger, the parent’s authorizing resolutions, and all supporting records in your corporate minute books. They are not typically filed with the Secretary of State but should be maintained for audit, litigation, or due diligence.

How to Fill Out a Form 623 – Parent-Subsidiary Certificate of Merger – Business Organizations Code

Follow these steps to prepare and file Form 623 correctly.

1) Confirm you qualify for a short-form merger

• Verify that the parent owns at least 90% of each class of the subsidiary’s outstanding ownership or voting interests. For corporations, confirm 90% of each class of shares. For LLCs and LPs, confirm 90% of membership or partnership interests.
• If you are merging multiple subsidiaries, confirm 90% ownership in each one.
• If you do not meet the threshold for any subsidiary, you cannot use Form 623 for that entity.

2) Build your plan of merger

• Draft a simple plan of merger that names all entities, identifies the survivor, and sets the conversion of interests. Specify whether minority interests in any subsidiary convert into survivor interests, cash, or a mix.
• Include any amendments you want to make to the survivor’s governing documents, such as a name change or purpose update.
• Set an effective date and time. You may choose effectiveness on filing or a delayed effective date within the allowed window.
• You do not generally file the plan with the Secretary of State, but you must maintain it in your records. The certificate will reference that the merger was approved and will outline key elements.

3) Obtain internal approvals and consents

• Prepare parent-level approvals required by its governing documents, for corporations, which is typically a board resolution. For LLCs, follow the company agreement’s process. For LPs, follow the partnership agreement.
• Confirm you do not need subsidiary owner approval. In a short-form merger, the parent has that authority. However, check for any contract, loan, lease, or regulatory consents tied to mergers. Obtain those before filing.
• If the survivor’s name will change, confirm name availability in Texas to avoid rejection.

4) Gather entity identification details

• For each Texas entity party to the merger, locate the exact legal name and Texas file number. You will list every merging entity and the surviving entity.
• Identify the organizational form and jurisdiction for each entity (for example, Texas limited liability company, Delaware corporation).
• Confirm the registered office and principal office addresses are current. Update separately if needed before filing.

5) Complete the parties section

• List the full legal name, organizational form, home jurisdiction, and Texas file number of each merging entity, including the parent and each subsidiary.
• Identify the surviving entity by name, form, and jurisdiction. If the survivor is a Texas entity, note that. If the survivor is foreign, note that as well.

6) State parent ownership

• Include a clear statement that the parent owns at least 90% of the outstanding ownership or voting power of each class of each subsidiary that will merge.
• If ownership is indirect through wholly owned entities, explain the chain to show the 90% standard is met by the parent as defined for short-form mergers.

7) Approval statement

• State that the parent approved the merger in accordance with the Texas Business Organizations Code and its governing documents.
• Confirm that no approval of the subsidiary owners was required because the parent satisfied the 90% ownership requirement.

8) Survivor amendments and organizational information

• If the survivor’s governing documents will be amended by the merger, include those amendments in the certificate. This can cover a name change, a registered office or registered agent change in Texas, or purpose changes.
• If the survivor is a Texas entity and you are changing its name, the new name must be available and compliant.
• If the survivor is a foreign entity that will transact business in Texas, prepare to file its foreign registration, if not already registered.

9) Conversion of interests

• Briefly describe how the merger affects outstanding ownership interests. This can be “all equity interests in Subsidiary A convert into equity interests in Parent on a one-for-one basis” or “all equity interests in Subsidiary B convert into the right to receive cash consideration of X dollars per unit.”
• State whether any fractional interests will be cash-paid or rounded as allowed by your plan.
• The detailed mechanics live in your plan of merger. Keep that document; the certificate summarizes the essentials.

10) Effective date and time

• Choose when the merger will become effective. You may select upon filing or a delayed effective date. The delayed date must fall within the allowed statutory window.
• If you need closing day coordination, select a delayed effective date and time to match funding or operational cutover.

11) Tax clearance and attachments

• If any Texas taxable entity will not survive the merger, attach the required certificate of account status for dissolution or termination issued by the Texas tax authority for that entity.
• Include any other attachments required by your entity type or transaction, such as regulatory approvals where applicable.
• If you are merging multiple subsidiaries, include any additional schedules the form requests for listing extra entities.

12) Address for the surviving entity

• Provide the address of the surviving entity’s principal office. This is used for record purposes and service of process context.
• If the survivor is Texas-organized, ensure its registered office and agent on file are current. If not, update them as part of this filing if permitted, or through a separate filing.

13) Execution block and signature

• The certificate must be signed by an authorized person. In a short-form parent-subsidiary merger, the parent typically signs. The signer should be a duly authorized officer, manager, or partner as applicable.
• Use the exact title and name of the signer, and date the signature. If multiple entities need to sign for clarity, follow the form’s signature instructions.

14) Filing method and fees

• Submit the completed Form 623 to the Texas Secretary of State with the required fee. You may file online or by mail. Make sure the fee covers all parties as required by the fee schedule for your entity types.
• If filing by mail, include a check or money order payable as instructed. If filing online, have payment information ready.
• If your filing is urgent, request expedited processing when available and include any additional fee.

15) Confirmation and recordkeeping

• After acceptance, keep the stamped copy or evidence of filing with your corporate records. The merger is effective on the date and time stated in the filed certificate.
• Circulate the effective date internally. Update bank accounts, insurance, payroll, licenses, and contract counterparties. File any title or UCC updates if a counterparty requires them, even though assets vest by operation of law.
• If the survivor is foreign and plans to do business in Texas, file or update its Texas foreign registration so there is no gap in qualification.

16) Common pitfalls to avoid

• Do not assume 90% based on economic rights alone. Confirm you hold 90% of each class with voting or ownership power as required by law for your entity type.
• Do not forget a tax clearance for any non-surviving Texas taxable entity. If required and missing, your filing can be rejected or delayed.
• Do not omit amendments you intend to take effect at closing. If you plan to change the survivor’s name or governance terms on day one, put them in the certificate.
• Do not pick an effective date that conflicts with loan covenants, leases, or insurance coverage. Align the date and time with operational readiness.

17) Practical drafting tips

• Use precise legal names as they appear in Texas records. Small name errors cause rejections.
• If you have many subsidiaries, attach a schedule listing each with full name, jurisdiction, organizational form, and Texas file number. Reference the schedule in the certificate.
• Keep the conversion of interest language consistent with your capitalization tables. Reconfirm math and rounding conventions to avoid disputes with minority owners.

18) Post-merger clean-up checklist

• Update the survivor’s governing documents to reflect any amendments included in the merger.
• Update the survivor’s cap table to record conversions or issuances resulting from the merger.
• Notify counterparties where contracts require notice, even if consent was not required.
• Update tax accounts, permits, and local registrations to reflect the survivor. Close accounts for non-surviving entities that have been merged out.

If you follow this sequence, Form 623 is straightforward. Verify the 90% ownership threshold, prepare a clear plan of merger, obtain the parent’s approval, complete the certificate with accurate party information, include any survivor amendments, set the effective date, attach any required tax clearance, and submit with the fee. Once filed, the merger takes legal effect, the non-surviving subsidiary ends, and the survivor owns all assets and assumes all obligations by operation of law.

Legal Terms You Might Encounter

• Parent entity means the company that owns the subsidiary. For this form, the parent must own at least a controlling interest that allows a short-form merger under the Business Organizations Code. If you do not meet that threshold, you likely need a different merger filing.
• Subsidiary means the company that the parent owns and will merge into the survivor. Form 623 is designed for this parent-subsidiary structure. You will list each subsidiary by legal name, file number, and jurisdiction.
• Short-form merger refers to a merger that the parent can approve without a vote of the subsidiary’s owners. You use this form when the parent meets the required ownership level. The form lets you certify that the merger qualifies as a short-form.
• Survivor is the company that remains after the merger. It can be the parent or, less often, a subsidiary. On Form 623, you must identify the survivor and include any amendments to its formation document if you want changes to take effect at closing.
• Plan of merger is the document that states who is merging, what happens to ownership interests, and who assumes liabilities. For a parent-subsidiary short-form merger, you can attach a plan or use the specific statements on Form 623 that replace a full plan. If you attach a plan, it must match the entries on the form.
• Conversion of ownership interests describes how the subsidiary’s shares or membership interests turn into something else. They might convert into parent shares, cash, or be canceled. Form 623 requires you to state the method of conversion or to certify the cancellation when the parent owns all interests.
• Governing authority means the group or person with the power to approve the merger for each entity. It could be a board of directors, managers, or a general partner. The form asks you to confirm the correct approval method, and for the short-form, that the parent approved it as allowed.
• Effective date and time are set when the merger becomes legally effective. You can make it effective on filing or choose a delayed date or time. Texas allows a delayed effective provision, typically no more than 90 days after filing. You must enter this clearly on the form.
• Foreign entity is a company formed outside Texas. If a foreign entity is part of the merger or will be the survivor, the form collects its jurisdiction and registration details. You may also need to handle filings in that other jurisdiction.
• Registered agent and registered office are the official contacts for the survivor in Texas. If the survivor is or becomes a Texas filing entity, it must maintain a registered agent and office. Form 623 accepts amendments to the survivor’s formation document, which can include changes to the registered agent and office.
• Assumption of liabilities means the survivor takes on the debts and obligations of each subsidiary. The plan or the form’s statements cover this. You will confirm that the survivor assumes all liabilities unless you state otherwise, as allowed by law.

FAQs

Do you need to own 90% of the subsidiary to use Form 623?

You should use Form 623 only when the parent meets the ownership level that permits a short-form merger under Texas law. In practice, this usually means at least a 90% ownership or voting interest. If you do not meet that level, use the standard certificate of merger filing instead.

Do you need a plan of merger for a parent-subsidiary merger?

You can attach a plan of merger, or you can rely on the form’s parent-subsidiary statements if they cover everything required. Attaching a separate plan can help when you need detailed conversion terms or amendments to the survivor’s formation document.

Can you merge more than one subsidiary at once?

Yes, a parent can merge multiple subsidiaries in one filing if the parent meets the qualifying ownership level for each subsidiary. Be sure to list each subsidiary with complete information. Make sure your plan or the form’s statements address all subsidiaries and the conversion of each class of interests.

Do you need approval from the subsidiary’s owners?

No, a short-form merger does not require a vote of the subsidiary’s owners. The parents’ governing authority approves the merger. You still must confirm that the parent had the power to approve and that the form is signed by an authorized person.

Can the merger change the survivor’s name or formation document?

Yes, you can amend the survivor’s formation document as part of the merger. You include the amendments in the plan or in the relevant section of the form. State the exact text of the amendments. If you plan to change the name, confirm the name is available before filing.

How long does a merger take to be effective?

You can choose effectiveness on filing or a delayed date and time within the allowed period. Processing time depends on filing volume and any expedited options. Plan for possible delays. Do not close the transaction operationally until the filing is accepted and effective.

Do you need to file in another state, too?

If any entity in the merger is formed outside Texas, or if the survivor exists outside Texas, you may need to file in that jurisdiction as well. Coordinate the timing so the filings align. If the survivor will do business in Texas but is not a Texas entity, register it to transact in Texas.

Do you need tax clearance to file the merger?

You do not submit a tax clearance with Form 623. But you should close out tax accounts for non-survivors and update tax records for the survivor after the merger. Handle any franchise tax, payroll, and sales tax changes promptly to avoid penalties.

Checklist: Before, During, and After the Form 623 – Parent-Subsidiary Certificate of Merger – Business Organizations Code

Before signing

• Confirm qualifying ownership. Verify the parent meets the short-form threshold for each subsidiary.
• Identify entities. Gather the exact legal names, Texas file numbers, and jurisdictions of formation.
• Choose the survivor. Decide whether the parent or a subsidiary will survive. Confirm registration status.
• Draft the plan (if used). Include conversion terms, assumption of liabilities, and any amendments.
• Nail down conversion terms. Specify how each class or series of interests will convert or be canceled.
• Confirm authority. Prepare board or manager resolutions for the parent approving the merger.
• Amendments to survivor. Draft the exact text for any name or governance changes to the survivor.
• Effective date/time. Decide on filing effectiveness or a delayed date/time within the allowed period.
• Registered agent. Confirm the survivor’s registered agent and office will be accurate at effectiveness.
• Foreign filings. Determine if other states require filings, consents, or notices, and align the timing.
• Debt and consents. Review loan documents, contracts, and leases for required notices or approvals.
• Tax and payroll. Plan for EIN, payroll, and tax account updates at closing. Set internal deadlines.
• Cap table and ledgers. Reconcile ownership records for each subsidiary to match the form and plan.
• Licenses and permits. Identify licenses to transfer, renew, or update at closing.
• Banking and UCC. Prepare bank resolutions and UCC updates. Coordinate with lenders and banks.
• Communications plan. Prepare stakeholder notices to employees, customers, and vendors.

During signing

• Names and numbers. Check every entity name, file number, and jurisdiction for accuracy.
• Survivor details. Confirm the survivor’s name, entity type, and jurisdiction are correct.
• Plan alignment. Ensure the plan of merger matches all entries in the form.
• Conversion clarity. Verify each class or series conversion or cancellation is stated correctly.
• Amendments text. Insert exact amendment language for the survivor’s formation document if needed.
• Approvals. Confirm the parent’s governing authority approval date and method.
• Effective provision. Select “upon filing” or enter a valid delayed date/time. Avoid conflicting dates.
• Attachments. Include the plan, any consents, and any required additional provisions.
• Signature block. Have an authorized person sign. Include printed name and title. Date the form.
• Fees. Prepare the correct filing fee payment. Use a payment method that the filing office accepts.
• Copies. Create a complete execution set for your records and closing binder.

After signing

• File with the Secretary of State. Submit Form 623, attachments, and the fee. Consider expedited service if needed.
• Track acceptance. Monitor status until you receive the file-stamped certificate or acknowledgment.
• Confirm effectiveness. Verify the effective date and time. Do not operationally close before that time.
• Distribute documents. Circulate the filed certificate and plan to leadership, counsel, and lenders.
• Update Texas records. If the survivor is a Texas entity, confirm the registered agent and office on record.
• Foreign qualifications. Register the survivor in each state where it will operate, if needed.
• Withdraw and terminate. Cancel registrations of non-survivor entities in other states where they operated.
• Notify counterparties. Send formal notices to banks, landlords, insurers, and key vendors.
• Tax updates. Update franchise tax, payroll accounts, and sales tax permits. Close non-survivor accounts.
• Employment and benefits. Move employees to the survivor. Update benefit plans and payroll systems.
• Intellectual property. Record ownership changes for trademarks, copyrights, and patents.
• Real estate and titles. Record merger with county offices if property or titles are affected.
• UCC and liens. Amend or continue UCC filings to reflect the survivor as debtor where needed.
• Licenses and permits. Transfer or reissue required licenses. Update regulatory registrations.
• Internal records. Update minute books, ledgers, equity registers, and capitalization tables.
• Public-facing assets. Update websites, invoices, forms, signage, and stationery.
• Post-closing review. Calendar any earnouts, post-merger integrations, and compliance dates.

Common Mistakes to Avoid Form 623 – Parent-Subsidiary Certificate of Merger – Business Organizations Code

• Using the wrong form. Do not use Form 623 if the parent does not meet the short-form ownership threshold. Filing the wrong form leads to rejection and delays.
• Missing or inconsistent entity information. Don’t mismatch legal names, file numbers, or jurisdictions. Inconsistencies cause rejections or require corrections that slow closing.
• Unclear conversion terms. Don’t leave the conversion or cancellation of interests vague. Ambiguity creates disputes, accounting issues, and potential tax problems.
• Ignoring amendments to the survivor. Don’t forget to include the name or governance changes you need at closing. If you miss them, you will need separate filings later.
• Faulty effective date. Don’t enter a delayed effective date beyond the allowed period or one that conflicts with your closing steps. This creates enforceability risks and contract breaches.
• Skipping foreign or parallel filings. Don’t assume one Texas filing covers all. Failure to file in other jurisdictions can block operations and expose you to penalties.
• Wrong signature capacity. Don’t have the wrong person sign. Lack of proper authority can invalidate the filing.

What to Do After Filling Out the Form 623 – Parent-Subsidiary Certificate of Merger – Business Organizations Code

1. File the form with the Secretary of State. Include the fee and any attachments. If timing matters, consider expedited handling and coordinate courier or electronic submission as allowed.
2. Wait for confirmation. Do not treat the merger as effective until you receive the filed certificate and your selected effective date and time have passed. Confirm the date on your closing checklist.
3. Distribute final documents. Provide the filed certificate and plan of merger to executives, accounting, lenders, and your registered agent. Store digital and hard copies in your corporate records.
4. Implement the merger. Move assets, contracts, and employees to the survivor. Update bank accounts, ACH and wire instructions, and signature cards. Transition accounting systems and payroll.
5. Handle tax and compliance steps. Update franchise tax records for the survivor. Close accounts for non-survivor entities. Review EIN implications and payroll reporting changes. Align sales tax permits and unemployment accounts with the survivor.
6. Address third-party contracts. Send notices required by credit agreements, leases, vendor contracts, and customer agreements. Confirm no event of default occurred. Obtain post-closing consents if required.
7. Update public records. Record property and vehicle title updates. Amend or continue UCC filings. Re-record any assumed names now used by the survivor.
8. Manage licenses and permits. Transfer or reapply for permits tied to the non-survivor’s name. Update professional, health, environmental, and industry-specific registrations.
9. Complete foreign filings. Register the survivor in states where it will operate. Withdraw the non-survivor where it no longer does business. Align filing dates with the Texas effective date.
10. Integrate corporate records. Update minute books, ownership ledgers, and capitalization tables. Archive subsidiary records. Keep the plan of merger and file the certificate with your formation documents.
11. Plan post-closing governance. Adopt updated governing documents if amended. Approve officer appointments and bank resolutions. Calendar compliance filings and annual report dates for the survivor.
12. Correct errors if needed. If you spot a filing error, prepare a correction filing as allowed. If the merger has not taken effect and you need to stop it, consider an abandonment filing. If you need further changes after effectiveness, use amendments to the survivor’s formation document.
13. Maintain communications. Notify employees and customers. Provide updated W-9, invoicing, and remittance instructions. Keep a help desk or inbox ready for vendor and customer questions.