Minnesota Session Laws - 1987, Regular Session

  

                         Laws of Minnesota 1987 

                        CHAPTER 203-S.F.No. 577 
           An act relating to business corporations; regulating 
          mergers and exchanges; amending Minnesota Statutes 
          1986, sections 302A.111, subdivision 2; 302A.471, 
          subdivisions 1 and 3; 302A.601, subdivision 2; 
          302A.611; 302A.613; 302A.615; 302A.631; and 302A.641, 
          subdivision 1. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 302A.111, 
subdivision 2, is amended to read:  
    Subd. 2.  [STATUTORY PROVISIONS THAT MAY BE MODIFIED ONLY 
IN ARTICLES.] The following provisions govern a corporation 
unless modified in the articles:  
    (a) A corporation has general business purposes (section 
302A.101);  
    (b) A corporation has perpetual existence and certain 
powers (section 302A.161);  
    (c) The power to adopt, amend, or repeal the bylaws is 
vested in the board (section 302A.181);  
    (d) A corporation must allow cumulative voting for 
directors (section 302A.215);  
    (e) The affirmative vote of a majority of directors present 
is required for an action of the board (section 302A.237);  
    (f) A written action by the board taken without a meeting 
must be signed by all directors (section 302A.239);  
    (g) The board may authorize the issuance of securities and 
rights to purchase securities (section 302A.401, subdivision 1); 
    (h) All shares are common shares entitled to vote and are 
of one class and one series (section 302A.401, subdivision 2, 
clauses (a) and (b));  
    (i) All shares have equal rights and preferences in all 
matters not otherwise provided for by the board (section 
302A.401, subdivision 2, clause (b));  
    (j) The par value of shares is fixed at one cent per share 
for certain purposes and may be fixed by the board for certain 
other purposes (section 302A.401, subdivision 2, clause (c));  
    (k) The board or the shareholders may issue shares for any 
consideration or for no consideration to effectuate share 
dividends or splits, and determine the value of nonmonetary 
consideration (section 302A.405, subdivision 1);  
    (l) Shares of a class or series must not be issued to 
holders of shares of another class or series to effectuate share 
dividends or splits, unless authorized by a majority of the 
voting power of the shares of the same class or series as the 
shares to be issued (section 302A.405, subdivision 1);  
    (m) A corporation may issue rights to purchase securities 
whose terms, provisions, and conditions are fixed by the board 
(section 302A.409);  
    (n) A shareholder has certain preemptive rights, unless 
otherwise provided by the board (section 302A.413);  
    (o) The affirmative vote of the holders of a majority of 
the voting power of the shares present and entitled to vote at a 
duly held meeting is required for an action of the shareholders, 
except where this chapter requires the affirmative vote of a 
majority of the voting power of all shares entitled to vote 
(section 302A.437, subdivision 1);  
    (p) Shares of a corporation acquired by the corporation may 
be reissued (section 302A.553, subdivision 1); and 
    (q) An exchange need not be approved by shareholders of the 
acquiring corporation unless the outstanding shares entitled to 
vote of that corporation will be increased by more than 20 
percent immediately after the exchange (section 302A.613, 
subdivision 3, clause (c));  
    (r) An exchange need not be approved by shareholders of the 
acquiring corporation unless the outstanding participating 
shares of that corporation will be increased by more than 20 
percent immediately after the exchange (section 302A.613, 
subdivision 3, clause (d)); and 
    (s) Each share has one vote unless otherwise provided in 
the terms of the share (section 302A.445, subdivision 3). 
    Sec. 2.  Minnesota Statutes 1986, section 302A.471, 
subdivision 1, is amended to read:  
    Subdivision 1.  [ACTIONS CREATING RIGHTS.] A shareholder of 
a corporation may dissent from, and obtain payment for the fair 
value of the shareholder's shares in the event of, any of the 
following corporate actions:  
    (a) An amendment of the articles that materially and 
adversely affects the rights or preferences of the shares of the 
dissenting shareholder in that it:  
    (1) Alters or abolishes a preferential right of the shares; 
    (2) Creates, alters, or abolishes a right in respect of the 
redemption of the shares, including a provision respecting a 
sinking fund for the redemption or repurchase of the shares;  
    (3) Alters or abolishes a preemptive right of the holder of 
the shares to acquire shares, securities other than shares, or 
rights to purchase shares or securities other than shares;  
    (4) Excludes or limits the right of a shareholder to vote 
on a matter, or to cumulate votes, except as the right may be 
limited by dilution through the issuance of securities with 
similar voting rights;  
    (b) A sale, lease, transfer, or other disposition of all or 
substantially all of the property and assets of the corporation 
not made in the usual or regular course of its business, but not 
including a disposition in dissolution described in section 
302A.725, subdivision 2, or a disposition pursuant to an order 
of a court, or a disposition for cash on terms requiring that 
all or substantially all of the net proceeds of disposition be 
distributed to the shareholders in accordance with their 
respective interests within one year after the date of 
disposition;  
    (c) A plan of merger to which the corporation is a party, 
except as provided in subdivision 3;  
    (d) A plan of exchange pursuant to which the shares of the 
corporation are to be acquired is a party as the corporation 
whose shares will be acquired by the acquiring corporation, if 
the shares of the shareholder are entitled to be voted on the 
plan; or 
    (e) Any other corporate action taken pursuant to a 
shareholder vote with respect to which the articles, the bylaws, 
or a resolution approved by the board directs that dissenting 
shareholders may obtain payment for their shares.  
    Sec. 3.  Minnesota Statutes 1986, section 302A.471, 
subdivision 3, is amended to read:  
    Subd. 3.  [RIGHTS NOT TO APPLY.] The right to obtain 
payment under this section does not apply to the shareholders a 
shareholder of the surviving corporation in a merger or of the 
acquiring corporation in an exchange, if a vote of the 
shareholders of the corporation is not necessary to authorize 
the merger or exchange the shares of the shareholder are not 
entitled to be voted on the merger. 
    Sec. 4.  Minnesota Statutes 1986, section 302A.601, 
subdivision 2, is amended to read:  
    Subd. 2.  [EXCHANGE.] The A corporation may acquire all of 
the outstanding shares of one or more classes or series of a 
another corporation may be exchanged for shares of the same or a 
different class or series of one or more other corporations 
pursuant to a plan of exchange approved in the manner provided 
in sections 302A.611, 302A.613 to 302A.615, and 302A.631 to 
302A.651.  
    Sec. 5.  Minnesota Statutes 1986, section 302A.611, is 
amended to read:  
    302A.611 [PLAN OF MERGER OR EXCHANGE.] 
    Subdivision 1.  [CONTENTS OF PLAN.] A plan of merger or 
exchange shall contain:  
    (a) The names of the corporations proposing to merge or 
participate in an exchange, and:  
    (1) In the case of a merger, the name of the surviving 
corporation;  
    (2) In the case of an exchange, the name of the acquiring 
corporation;  
    (b) The terms and conditions of the proposed merger or 
exchange;  
    (c) (1) In the case of a merger, the manner and basis of 
converting the shares of the constituent corporations into 
securities of the surviving corporation or of any other 
corporation, or, in whole or in part, into money or other 
property; or 
    (2) In the case of an exchange, the manner and basis of 
exchanging the shares of other constituent corporations for 
shares of the acquiring corporation to be acquired for 
securities of the acquiring corporation or any other corporation 
or, in whole or part, into money or other property;  
    (d) In the case of a merger, a statement of any amendments 
to the articles of the surviving corporation proposed as part of 
the merger; and 
    (e) Any other provisions with respect to the proposed 
merger or exchange that are deemed necessary or desirable.  
    Subd. 2.  [OTHER AGREEMENTS.] The procedure authorized by 
this section does not limit the power of a corporation to 
acquire for money or property other than its shares all or part 
of the shares of a class one or more classes or series of 
another corporation by a negotiated agreement with the 
shareholders of the other corporation through a negotiated 
agreement with the shareholders or otherwise.  
    Sec. 6.  Minnesota Statutes 1986, section 302A.613, is 
amended to read:  
    302A.613 [PLAN APPROVAL.] 
    Subdivision 1.  [BOARD APPROVAL; NOTICE TO SHAREHOLDERS.] A 
resolution containing the plan of merger or exchange shall be 
approved by the affirmative vote of a majority of the directors 
present at a meeting of the board of each constituent 
corporation and shall then be submitted at a regular or a 
special meeting to the shareholders of (i) each constituent 
corporation at a regular or a special meeting., in the case of a 
plan of merger, and (ii) the corporation whose shares will be 
acquired by the acquiring corporation in the exchange, in the 
case of a plan of exchange.  If shareholders holding any class 
or series of stock of the corporation are entitled to vote on 
the plan of merger or exchange pursuant to this section, written 
notice shall be given to every shareholder of a corporation, 
whether or not entitled to vote at the meeting, not less than 14 
days nor more than 60 days before the meeting, in the manner 
provided in section 302A.435 for notice of meetings of 
shareholders.  The written notice shall state that a purpose of 
the meeting is to consider the proposed plan of merger or 
exchange.  A copy or short description of the plan of merger or 
exchange shall be included in or enclosed with the notice.  
    Subd. 2.  [APPROVAL BY SHAREHOLDERS.] At the meeting a vote 
of the shareholders shall be taken on the proposed plan.  The 
plan of merger or exchange is adopted when approved by the 
affirmative vote of the holders of a majority of the voting 
power of all shares entitled to vote.  A class or series of 
shares of the corporation is entitled to vote as a class or 
series if any provision of the plan would, if contained in a 
proposed amendment to the articles, entitle the class or series 
of shares to vote as a class or series and, in the case of an 
exchange, if the class or series is affected by the plan of 
included in the exchange. 
    Subd. 3.  [WHEN APPROVAL BY SHAREHOLDERS NOT REQUIRED.] 
Notwithstanding the provisions of subdivisions 1 and 2, 
submission of a plan of merger or exchange to a vote at a 
meeting of shareholders of a surviving or acquiring corporation 
is not required if:  
    (a) The articles of the corporation will not be amended in 
the transaction;  
    (b) Each holder of shares of the corporation that were 
outstanding immediately before the effective date of the 
transaction will hold the same number of shares with identical 
rights immediately thereafter;  
    (c) The number of shares of the corporation entitled to 
vote immediately after the merger or exchange, plus the number 
of shares of the corporation entitled to vote issuable on 
conversion or exchange of securities other than shares or on the 
exercise of rights to purchase securities issued by virtue of 
the terms of the transaction, will not exceed by more than 20 
percent, or, in the case of an exchange, a larger or smaller 
proportion provided in or pursuant to the articles, the number 
of shares of the corporation entitled to vote immediately before 
the transaction; and 
    (d) The number of participating shares of the corporation 
immediately after the transaction merger, plus the number of 
participating shares of the corporation issuable on 
conversion or exchange of, or on the exercise of rights to 
purchase, securities issued in the transaction, will not exceed 
by more than 20 percent, or, in the case of an exchange, a 
larger or smaller proportion provided in or pursuant to the 
articles, the number of participating shares of the corporation 
immediately before the transaction.  "Participating shares" are 
outstanding shares of the corporation that entitle their holders 
to participate without limitation in distributions by the 
corporation.  
    Sec. 7.  Minnesota Statutes 1986, section 302A.615, is 
amended to read:  
    302A.615 [ARTICLES OF MERGER OR EXCHANGE; CERTIFICATE.] 
    Subdivision 1.  [CONTENTS OF ARTICLES.] Upon receiving the 
approval required by section 302A.613, articles of merger or 
exchange shall be prepared that contain:  
    (a) The plan of merger or exchange;  
    (b) For each corporation, either:  
    (1) A statement that the plan has been approved by a vote 
of the shareholders pursuant to section 302A.613, subdivision 2; 
or 
    (2) A statement that a vote of the shareholders is not 
required by virtue of section 302A.613, subdivision 3.  
    Subd. 2.  [ARTICLES SIGNED, FILED.] The articles of merger 
or exchange shall be signed on behalf of each constituent 
corporation and filed with the secretary of state.  
    Subd. 3.  [CERTIFICATE.] The secretary of state shall issue 
a certificate of merger to the surviving corporation or its 
legal representative and a certificate of exchange to the 
acquiring corporation or its legal representative.  
    Sec. 8.  Minnesota Statutes 1986, section 302A.631, is 
amended to read:  
    302A.631 [ABANDONMENT.] 
    Subdivision 1.  [BY SHAREHOLDERS OR PLAN.] After a plan of 
merger or exchange has been approved at a meeting by the 
affirmative vote of the holders of a majority of the voting 
power of all voting shares of each constituent corporation by 
the shareholders entitled to vote on the approval of the plan as 
provided in section 302A.613, and before the effective date of 
the plan, it may be abandoned:  
    (a) If the shareholders of each of the constituent 
corporations have considered abandoning the plan and the 
abandonment has been approved entitled to vote on the approval 
of the plan as provided in section 302A.613 have approved the 
abandonment at a meeting by the affirmative vote of the holders 
of a majority of the voting power of all voting the shares of 
each constituent corporation entitled to vote and, if the 
shareholders of a constituent corporation are not entitled to 
vote on the approval of the plan under section 302A.613, the 
board of directors of the constituent corporation has approved 
the abandonment by the affirmative vote of a majority of the 
directors present;  
    (b) If the plan itself provides for abandonment and all 
conditions for abandonment set forth in the plan are met; or 
    (c) Pursuant to subdivision 2.  
    Subd. 2.  [BY BOARD; ARTICLES OF ABANDONMENT.] If articles 
of merger have not been filed with the secretary of state and 
the plan is to be abandoned, or if a plan of exchange is to be 
abandoned, a resolution A plan of merger or exchange may be 
abandoned, before the effective date of the plan, by a 
resolution of the board of directors of any constituent 
corporation abandoning the plan of merger or exchange may be 
approved by the affirmative vote of a majority of the directors 
present, subject to the contract rights of any other person 
under the plan. 
    Subd. 3.  [FILING OF ARTICLES.] If articles of merger or 
exchange have been filed with the secretary of state, the board 
but have not yet become effective, the constituent corporations, 
in the case of abandonment under subdivision 1, clause (a), the 
constituent corporations or any one of them, in the case of 
abandonment under subdivision 1, clause (b), or the abandoning 
corporation in the case of abandonment under subdivision 2, 
shall file with the secretary of state articles of abandonment 
that contain:  
    (a) The name names of the corporation constituent 
corporations;  
    (b) The provision of this section under which the plan is 
abandoned; and 
    (c) If the plan is abandoned under subdivision 2, the text 
of the resolution approved by the affirmative vote of a majority 
of the directors present abandoning the plan. 
    Sec. 9.  Minnesota Statutes 1986, section 302A.641, 
subdivision 1, is amended to read:  
    Subdivision 1.  [EFFECTIVE DATE.] A merger or exchange is 
effective when the articles of merger or exchange are filed with 
the secretary of state or on a later date specified in the 
articles of merger or exchange.  An exchange is effective on the 
date specified in the plan of exchange. 
    Approved May 21, 1987