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Key: (1) language to be deleted (2) new language

 

                         Laws of Minnesota 1985 

                          CHAPTER 5-S.F.No. 10 
           An act relating to corporations; regulating corporate 
          take-overs and control share acquisitions; defining 
          terms; prescribing penalties; amending Minnesota 
          Statutes 1984, sections 80B.01, subdivisions 6, 8, and 
          9; 80B.03, subdivisions 1, 2, 4a, 5, and 6; 80B.05; 
          80B.06, subdivision 7; 80B.07, subdivision 3; 80B.10, 
          subdivisions 1, 4, and by adding a subdivision; 
          302A.011, subdivisions 37, 39, and by adding a 
          subdivision; 302A.449, subdivision 7; and 302A.671; 
          repealing Minnesota Statutes 1984, section 80B.06, 
          subdivisions 3, 4, and 6. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1984, section 80B.01, 
subdivision 6, is amended to read:  
    Subd. 6.  "Offeror" means a person who makes or in any way 
participates in making a take-over offer.  Offeror does not 
include any bank or broker-dealer loaning funds to an offeror in 
the ordinary course of its business, or any bank, broker-dealer, 
attorney, accountant, consultant, employee, or other person 
furnishing information or advice to or performing ministerial 
duties for an offeror, and not otherwise participating in the 
take-over offer.  When two or more persons act as a partnership, 
limited partnership, syndicate, or other group for the purpose 
of acquiring, owning or voting securities of a target company, 
the syndicate or group is an "offeror." 
    Sec. 2.  Minnesota Statutes 1984, section 80B.01, 
subdivision 8, is amended to read: 
    Subd. 8.  "Take-over offer" means the offer to acquire any 
equity securities of a target company from a resident of this 
state pursuant to a tender offer or request or invitation for 
tenders, if after the acquisition of all securities acquired 
pursuant to the offer either (1) the offeror would be directly 
or indirectly a beneficial owner of more than ten percent of any 
class of the outstanding equity securities of the target company 
and was directly or indirectly the beneficial owner of less than 
ten percent of any class of the outstanding equity securities of 
the target company prior to the commencement of the offer; or 
(2) the beneficial ownership by the offeror of any class of the 
outstanding equity securities of the target company would be 
increased by more than five ten percent of that class and the 
offeror was directly or indirectly the beneficial owner of ten 
percent or more of any class of the outstanding equity 
securities of the target company prior to the commencement of 
the offer.  Clause (2) does not apply if after the acquisition 
of all securities acquired pursuant to the offer, the offeror 
would not be directly or indirectly a beneficial owner of more 
than ten percent of any class of the outstanding equity 
securities of the target company.  Take-over offer does not 
include: 
    (a) An offer to exchange the securities of one issuer for 
the securities of another issuer, if the offer is registered 
under chapter 80A; 
    (b) An offer in connection with the acquisition of a 
security which, together with all other acquisitions by the 
offeror of securities of the same class of equity securities of 
the issuer, would not result in the offeror having acquired more 
than two percent of this class during the preceding 12-month 
period; 
    (c) (b) An offer by the issuer to acquire its own equity 
securities unless the offer is made during the pendency of a 
takeover offer by a person who is not an associate or affiliate 
of the issuer;  
    (d) (c) An offer in which the target company is an 
insurance company subject to regulation by the commissioner, a 
financial institution regulated by the commissioner, or a public 
service utility subject to regulation by the public utilities 
commission. 
    Sec. 3.  Minnesota Statutes 1984, section 80B.01, 
subdivision 9, is amended to read: 
    Subd. 9.  "Target company" means an issuer of publicly 
traded equity securities which has at least 20 percent of its 
equity securities beneficially held owned by residents of this 
state and has substantial owns or controls assets in located 
within this state which have a fair market value of at least 
$1,000,000.  For the purposes of this chapter, an equity 
security is publicly traded if a trading market exists for the 
security at the time the offeror makes a take-over offer for the 
security.  A trading market exists if the security is traded on 
a national securities exchange, whether or not registered 
pursuant to the Securities Exchange Act of 1934, or the 
over-the-counter market. 
    Sec. 4.  Minnesota Statutes 1984, section 80B.03, 
subdivision 1, is amended to read: 
    Subdivision 1.  It is unlawful for any person to make a 
take-over offer or to acquire any equity securities pursuant to 
the offer, unless the offer is effective under sections 80B.01 
to 80B.13.  A take-over offer is effective when the offeror 
files with the commissioner a registration statement containing 
the information prescribed in section 80B.03, subdivision 
subdivisions 2 and 6.  The offeror shall deliver a copy of the 
registration statement by certified mail personal service to the 
target company at its principal office and publicly disclose the 
material terms of the proposed offer, not later than the date of 
filing of the registration statement.  Public disclosure shall 
require, at a minimum, that a copy of the registration statement 
be supplied to all broker-dealers maintaining an office in this 
state currently quoting the security.  
    Sec. 5.  Minnesota Statutes 1984, section 80B.03, 
subdivision 2, is amended to read: 
    Subd. 2.  The registration statement shall be filed on 
forms prescribed by the commissioner, and shall be accompanied 
by a consent by the offeror to service of process and the filing 
fee specified in section 80B.08, and shall contain the following 
information and such additional information as the commissioner 
by rule prescribes.:  
    (a) all of the information specified in section 80B.03, 
subdivision 6; 
    (b) two copies of all solicitation materials intended to be 
used in the take-over offer in the form proposed to be published 
or sent or delivered to offerees; 
    (c) if the offeror is other than a natural person, 
information concerning its organization and operations, 
including the year, form and jurisdiction of its organization, a 
description of each class of equity security and long term debt, 
a description of the business conducted by the offeror and its 
subsidiaries and any material changes therein during the past 
three years, a description of the location and character of the 
principal properties of the offeror and its subsidiaries, a 
description of any material pending legal or administrative 
proceedings in which the offeror or any of its subsidiaries is a 
party, the names of all persons directly or indirectly 
controlling the offeror, directors and executive officers of the 
offeror and their material business activities and, their 
business affiliations during the past three years and any 
material legal or administrative proceedings in which the 
controlling persons, directors, or executive officers are or 
were a party during the past three years, and financial 
statements of the offeror in such form and for such period of 
time as the commissioner may by rule prescribe; 
    (d) if the offeror is a natural person, information 
concerning his identity and background, including his business 
activities and affiliations during the past three years, and a 
description of any material pending legal or administrative 
proceedings in which the offeror is a party.  
    Sec. 6.  Minnesota Statutes 1984, section 80B.03, 
subdivision 4a, is amended to read: 
    Subd. 4a.  Within three calendar days of the date of filing 
of the registration statement, the commissioner may by order 
summarily suspend the effectiveness of the take-over offer if 
the commissioner determines that the registration statement does 
not contain all of the information specified in subdivision 
subdivisions 2 and 6 or that the take-over offer materials 
provided to offerees do not provide full disclosure to offerees 
of all material information concerning the take-over offer.  The 
suspension shall remain in effect only until the determination 
following a hearing held pursuant to subdivision 5.  
    Sec. 7.  Minnesota Statutes 1984, section 80B.03, 
subdivision 5, is amended to read: 
    Subd. 5.  A hearing shall be scheduled by the commissioner 
with respect to each suspension under this section and shall be 
held within ten calendar days of the date of the suspension.  
Chapter 14 does not apply to the hearing.  The commissioner may 
allow any interested party to appear at and participate in the 
hearing in a manner considered appropriate by the commissioner.  
The commissioner's determination made following the hearing 
shall be made within three calendar days after such hearing has 
been completed but not more than 16 calendar days after the date 
of the suspension.  The commissioner may prescribe different 
time limits that are shorter than those specified in this 
subdivision by rule or order.  If, based upon the hearing, the 
commissioner finds that the take-over offer fails to provide for 
registration statement does not contain all of the information 
provided in subdivisions 2 and 6 or that the take-over offer 
materials provided to offerees do not provide full and fair 
disclosure to offerees of all material information concerning 
the offer, or that the take-over offer is in material violation 
of any provision of sections 80B.01 to 80B.13, the commissioner 
shall permanently suspend the effectiveness of the take-over 
offer, subject to the right of the offeror to correct disclosure 
and other deficiencies identified by the commissioner and to 
reinstitute the take-over offer by filing a new or amended 
registration statement pursuant to this section 80B.03.  
    Sec. 8.  Minnesota Statutes 1984, section 80B.03, 
subdivision 6, is amended to read: 
    Subd. 6.  The form required to be filed by subdivision 2, 
clause (a), shall contain the following information and 
additional information the commissioner may by rule prescribe:  
    (a) the identity and background of all persons on whose 
behalf the acquisition of any equity security of the issuer has 
been or is to be affected; 
    (b) the source and amount of funds or other consideration 
used or to be used in acquiring any equity security, including, 
if applicable, a statement describing any securities which are 
being offered in exchange for the equity securities of the 
issuer, and if any part of the acquisition price is or will be 
represented by borrowed funds or other consideration, a 
description of the material terms of any financing arrangements 
and the names of the parties from whom the funds were borrowed; 
    (c) if the purpose of the acquisition is to gain control of 
the target company, a statement of any plans or proposals which 
the person has, upon gaining control, to liquidate the issuer, 
sell its assets, effect its merger or consolidation, to change 
the location of its principal executive office or of a material 
portion of its business activities, to change its management or 
policies of employment, to materially alter its relationship 
with suppliers or customers or the communities in which it 
operates, or make any other major change in its business, 
corporate structure, management or personnel, and other 
information which would affect the shareholders' evaluation of 
the acquisition such other objective facts as would be 
substantially likely to affect a reasonable shareholder's 
evaluation of the take-over offer; 
    (d) the number of shares or units of any equity security of 
the issuer owned beneficially by the person and any affiliate or 
associate of the person, together with the name and address of 
each affiliate or associate; 
    (e) the material terms of any contract, arrangement, or 
understanding with any other person with respect to the equity 
securities of the issuer whereby the person filing the statement 
has or will acquire any interest in additional equity securities 
of the issuer, or is or will be obligated to transfer any 
interest in the equity securities to another.  
    Sec. 9.  Minnesota Statutes 1984, section 80B.05, is 
amended to read: 
    80B.05 [FRAUDULENT AND DECEPTIVE PRACTICES.] 
    It is unlawful for any offeror or target company or any 
controlling person of an offeror or target company or any 
broker-dealer acting on behalf of an offeror or target company 
to engage in any fraudulent, deceptive or manipulative acts or 
practices in connection with a take-over offer.  Fraudulent, 
deceptive and manipulative acts or practices include, without 
limitation: 
    (1) The publication or use in connection with the offer of 
any false statement of a material fact or the omission to state 
a material fact necessary to make the statements made not 
misleading; 
    (2) The sale by any controlling shareholders of a target 
company of any or their equity securities to the offeror for a 
consideration greater than that to be paid other stockholders 
pursuant to the offer or the purchase of any of the securities 
of a controlling shareholder of the target company by the 
offeror for a consideration greater than that to be paid other 
shareholders, pursuant to an agreement not disclosed to the 
other shareholders; 
    (3) The refusal by a target company incorporated under the 
laws of this state to permit an offeror who is a stockholder of 
record to examine its list of stockholders, and to make extracts 
therefrom, pursuant to the applicable corporation statutes and 
rules of this state and the United States, for the purpose of 
making a take-over offer in compliance with sections 80B.01 to 
80B.13, or in lieu thereof, to mail any solicitation materials 
published by the offeror to its security holders with reasonable 
promptness after receipt from the offeror of such materials 
together with the reasonable expenses of postage and handling;  
    (4) Except for forms of communication described in section 
80C.19, subdivision 4, the solicitation of any offeree for 
acceptance or rejection of a take-over offer or acquisition of 
any equity security pursuant to a take-over offer before the 
take-over offer is effective under sections 80B.01 to 80B.13 or 
while the offer is suspended under sections 80B.01 to 80B.13.  
    Notwithstanding any contrary provisions of this chapter, 
during the time a take-over offer is suspended under sections 
80B.01 to 80B.13, the offeror may distribute to offerees who are 
residents of this state the take-over offer materials, and any 
amendments to the offer, if the following statement, printed in 
not less than ten point bold face type, is affixed by the 
offeror or with the offeror's consent to the front cover of the 
materials:  "The commissioner of commerce, state of Minnesota, 
has suspended the solicitation and effectiveness within the 
state of Minnesota of the attached offering materials.  Until 
further notice, the attached materials are sent for informative 
purposes only and are not a solicitation to purchase shares." 
During the time any take-over offer is suspended under sections 
80B.01 to 80B.13, if the offeror elects to distribute materials 
to offerees who are residents of this state for informational 
purposes, the target company may distribute to offerees who are 
residents of this state a statement of the target company's 
position with respect to the take-over offer and the take-over 
offer materials, if the following statement, printed in not less 
than ten point bold face type, is attached to the front cover of 
the target company's communication:  "The commissioner of 
commerce, state of Minnesota, has suspended the solicitation and 
effectiveness within the state of Minnesota of the offer 
addressed herein.  Until further notice, the attached materials 
are sent for informative purposes only and are not a 
solicitation to reject or accept the offer." 
    Sec. 10.  Minnesota Statutes 1984, section 80B.06, 
subdivision 7, is amended to read: 
    Subd. 7.  No offeror may acquire from any resident of this 
state in any manner any equity securities of any class of a 
target company at any time within two years following the last 
purchase of securities pursuant to a take-over offer with 
respect to that class, including, but not limited to, 
acquisitions made by purchase, exchange, merger, consolidation, 
partial or complete liquidation, redemption, reverse stock 
split, recapitalization, reorganization or any other similar 
transaction, unless the holders of the equity securities are 
resident is afforded, at the time of the acquisition, a 
reasonable opportunity to dispose of the securities to the 
offeror upon substantially equivalent terms as those provided in 
the earlier take-over offer.  
     Sec. 11.  Minnesota Statutes 1984, section 80B.07, 
subdivision 3, is amended to read:  
    Subd. 3.  The commissioner may by rule or order exempt from 
any provisions of sections 80B.01 to 80B.13 any proposed 
take-over offer or any category or type of take-over offer which 
the commissioner determines does not have the purpose or effect 
of changing or influencing the control of a target company or 
where he determines that compliance with sections 80B.01 to 
80B.13 is not necessary for the protection of the offerees, and 
the commissioner may similarly exempt any persons from the 
requirement of filing statements under sections 80B.01 to 80B.13.
    Sec. 12.  Minnesota Statutes 1984, section 80B.10, 
subdivision 1, is amended to read: 
    Subdivision 1.  Any person, including a controlling person 
of an offeror or target company, who willfully violates any 
provision of sections 80B.01 to 80B.13 or any rule thereunder, 
or any order of the commissioner of which this person has 
notice, may be fined not more than $25,000 or imprisoned not 
more than five years or both.  Each of the acts specified shall 
constitute a separate offense and a prosecution or conviction 
for any one of such offenses shall not bar prosecution or 
conviction for any other offense.  No indictment or information 
may be returned under sections 80B.01 to 80B.13 more than six 
years after the alleged violation.  
     Sec. 13.  Minnesota Statutes 1984, section 80B.10, 
subdivision 4, is amended to read:  
    Subd. 4.  All shares of a target company incorporated under 
the laws of this state acquired from a Minnesota resident in 
violation of any provision of this chapter or any rule 
hereunder, or any order of the commissioner of which the person 
has notice, shall be denied voting rights for one year after 
acquisition, the shares shall be nontransferable on the books of 
the target company for one year after acquisition and the target 
company shall, during this one-year period, have the option to 
call the shares for redemption either at the price at which the 
shares were acquired or at book value per share as of the last 
day of the fiscal quarter ended prior to the date of the call 
for redemption.  Such a redemption shall occur on the date set 
in the call notice but not later than 60 days after the call 
notice is given.  
    Sec. 14.  Minnesota Statutes 1984, section 80B.10, is 
amended by adding a subdivision to read:  
    Subd. 5.  [RIGHTS OF ACTION.] Offerors, offerees, and 
target companies may sue at law or in equity to enforce the 
provisions of this chapter.  
    Sec. 15.  Minnesota Statutes 1984, section 302A.011, 
subdivision 37, is amended to read: 
    Subd. 37.  [ACQUIRING PERSON.] "Acquiring person" means a 
person that is required to deliver an information statement 
under section 302A.671 proposing to make a control share 
acquisition.  When two or more persons act as a partnership, 
limited partnership, syndicate, or other group for purposes of 
acquiring, owning or voting securities of an issuing public 
corporation, the syndicate or group is a "person." 
    "Acquiring person" does not include a licensed 
broker/dealer or licensed underwriter who (1) purchases shares 
of an issuing public corporation solely for purposes of resale 
to the public; and (2) is not acting in concert with an 
acquiring person. 
    Sec. 16.  Minnesota Statutes 1984, section 302A.011, 
subdivision 39, is amended to read: 
    Subd. 39.  [ISSUING PUBLIC CORPORATION.] "Issuing public 
corporation" means a corporation with at least 50 shareholders 
and having which has either its principal place of business or 
substantial assets located in this state or owns or controls 
assets located within this state that have a fair market value 
of at least $1,000,000. 
    Sec. 17.  Minnesota Statutes 1984, section 302A.011, is 
amended by adding a subdivision to read: 
    Subd. 41.  [BENEFICIAL OWNERSHIP.] Beneficial owner 
includes, but is not limited to, any person who directly or 
indirectly through any contract, arrangement, understanding, 
relationship, or otherwise has or shares the power to vote or 
direct the voting of a security and the power to dispose of, or 
direct the disposition of, the security.  "Beneficial ownership" 
includes, but is not limited to, the right, exercisable within 
60 days, to acquire securities through the exercise of options, 
warrants, or rights or the conversion of convertible securities, 
or otherwise.  The securities subject to these options, 
warrants, rights, or conversion privileges held by a person 
shall be deemed to be outstanding for the purpose of computing 
the percentage of outstanding securities of the class owned by 
this person, but shall not be deemed to be outstanding for the 
purpose of computing the percentage of the class owned by any 
other person.  A person is the beneficial owner of securities 
beneficially owned by any relative or spouse or relative of the 
spouse residing in the home of this person, any trust or estate 
in which this person owns ten percent or more of the total 
beneficial interest or serves as trustee or executor, any 
corporation or entity in which this person owns ten percent or 
more of the equity, and any affiliate or associate of this 
person. 
    Sec. 18.  Minnesota Statutes 1984, section 302A.449, 
subdivision 7, is amended to read: 
    Subd. 7.  [PROXY IN CONTROL SHARE ACQUISITION.] 
Notwithstanding any contrary provision of this chapter, a proxy 
relating to a meeting of shareholders required under section 
302A.671, subdivision 3, must be solicited separately from the 
offer to purchase or solicitation of an offer to sell shares of 
the issuing public corporation and must not be solicited sooner 
less than 30 days before the meeting unless otherwise agreed in 
writing by the acquiring person and the issuing public 
corporation.  Except for irrevocable proxies appointed in the 
regular course of business and not in connection with a control 
share acquisition, all proxies appointed for or in connection 
with the shareholder authorization of a control share 
acquisition pursuant to section 302A.671 shall be at all times 
terminable at will prior to the obtaining of the shareholder 
authorization, whether or not the proxy is coupled with an 
interest.  Without affecting any vote previously taken, the 
proxy may be terminated in any manner permitted by section 
302A.449, subdivision 3, or by giving oral notice of the 
termination in the open meeting of shareholders held pursuant to 
section 302A.671, subdivision 3.  The presence at a meeting of 
the person appointing a proxy does not revoke the appointment. 
    Sec. 19.  Minnesota Statutes 1984, section 302A.671, is 
amended to read: 
     302A.671 [CONTROL SHARE ACQUISITIONS.] 
    Subdivision 1.  [AUTHORIZATION IN ARTICLES.] (a) Unless 
otherwise expressly provided in the articles or in bylaws 
approved by the shareholders of an issuing public corporation, 
this section applies does not apply to a control share 
acquisition.  
    (b) All shares acquired by an acquiring person in violation 
of subdivision 4 shall be denied voting rights for one year 
after acquisition, the shares shall be nontransferable on the 
books of the corporation for one year after acquisition and the 
corporation shall, during the one-year period, have the option 
to call the shares for redemption either at the price at which 
the shares were acquired or at book value per share as of the 
last day of the fiscal quarter ended prior to the date of the 
call for redemption.  Such a redemption shall occur on the date 
set in the call notice but not later than 60 days after the call 
notice is given.  
    Subd. 2.  [INFORMATION STATEMENT.] A An acquiring person 
proposing to make a control share acquisition shall deliver to 
the issuing public corporation at its principal executive office 
an information statement containing all of the following:  
    (a) the identity of the acquiring person;  
    (b) a reference that the statement is made under this 
section;  
    (c) the number of shares of the issuing public corporation 
beneficially owned by the acquiring person; 
    (d) a specification of which of the following ranges of 
voting power in the election of directors would result from 
consummation of the control share acquisition:  
    (1) at least ten 20 percent but less than 20 33-1/3 
percent;  
    (2) at least 20 33-1/3 percent but less than 30 or equal to 
50 percent;  
    (3) at least 30 percent but less than 40 percent over 50 
percent; 
    (4) at least 40 percent but less than a majority; 
    (5) at least a majority; and 
    (e) the terms of the proposed control share acquisition, 
including, but not limited to, the source of funds or other 
consideration and the material terms of the financial 
arrangements for the control share acquisition, any plans or 
proposals of the acquiring person to liquidate the issuing 
public corporation, to sell all or substantially all of its 
assets, or merge it or exchange its shares with any other 
person, to change the location of its principal executive office 
or of a material portion of its business activities, to change 
materially its management or policies of employment, to alter 
materially its relationship with suppliers or customers or the 
communities in which it operates, or make any other material 
change in its business, corporate structure, management or 
personnel, and such other information which objective facts as 
would be substantially likely to affect the decision of a 
shareholder with respect to voting on the proposed control share 
acquisition. 
    Subd. 3.  [MEETING OF SHAREHOLDERS.] Within five days after 
receipt of an information statement pursuant to subdivision 2, a 
special meeting of the shareholders of the issuing public 
corporation shall be called pursuant to section 302A.433, 
subdivision 1, to vote on the proposed control share 
acquisition.  The meeting shall be held no later than 55 days 
after receipt of the information statement, unless the acquiring 
person agrees to a later date, and no sooner than 30 days after 
receipt of the information statement, if the acquiring person so 
requests in writing when delivering the information statement. 
The notice of the meeting shall at a minimum be accompanied by a 
copy of the information statement and a statement disclosing 
that the board of directors of the issuing public company 
corporation recommends acceptance of, expresses no opinion and 
is remaining neutral toward, recommends rejection of, or is 
unable to take a position with respect to the proposed control 
share acquisition.  The notice of meeting shall be given within 
25 days after receipt of the information statement.  
    Subd. 4.  [CONSUMMATION OF CONTROL SHARE ACQUISITION.] (a) 
The acquiring person may consummate the proposed control share 
acquisition if and only if both of the following occur:  
    (1) the proposed control share acquisition is approved by 
the affirmative vote of the holders of a majority of the voting 
power of all shares entitled to vote which are not beneficially 
owned by the acquiring person.  
    A class or series of shares of the corporation is entitled 
to vote as a class or series if any provision of the control 
share acquisition would, if contained in a proposed amendment to 
the articles, entitle the class or series to vote as a class or 
series; and 
    (2) the proposed control share acquisition is consummated 
within 180 days after shareholder approval.  
    Subd. 5.  [RIGHTS OF ACTION.] An acquiring person, an 
issuing public corporation, and shareholders of an issuing 
public corporation may sue at law or in equity to enforce the 
provisions of this section and section 302A.449, subdivision 7.  
    Subd. 6.  [RETURN OF SHARES IF ACQUISITION NOT 
CONSUMMATED.] If the proposed control share acquisition is not 
consummated in accordance with this section, the acquiring 
person shall immediately return any and all shares held in 
anticipation of the consummation to the shareholders from whom 
the person received the shares. 
    Sec. 20.  [REPEALER.] 
    Minnesota Statutes 1984, section 80B.06, subdivisions 3, 4, 
and 6 are repealed. 
    Sec. 21.  [EFFECTIVE DATE.] 
    The amendments to Minnesota Statutes, section 302A.671, 
subdivision 1, paragraph (a), made by this act are effective 
August 1, 1986. 
    Approved June 24, 1985