2006 Minnesota Statutes

302A.553 POWER TO ACQUIRE SHARES.
    Subdivision 1. When permitted; status of shares. (a) A corporation may acquire its own
shares, subject to section 302A.551 and subdivision 3.
(b) If a corporation acquires its own shares, then any of the acquired shares that are not
pledged by the corporation as security for the future payment of some or all of the purchase price
for the shares constitute authorized but unissued shares of the corporation, unless the articles
provide that they shall not be reissued. If the articles prohibit reissue, the number of authorized
shares reduced by the number of shares acquired.
(c) If a corporation pledges acquired shares as security for future payment of all or part of the
purchase price for the shares and reissues the pledged shares in its own name; then
(1) the shares must continue to be issued and outstanding except for voting and determination
of a quorum, and the shares are not considered to be present and entitled to vote at any meeting
of shareholders;
(2) the corporation may not vote or exercise any other rights of a shareholder with respect to
the pledged shares, but the pledgee shall have any rights, other than the right to vote, with respect
to the shares to which the pledgee is entitled to by contract;
(3) if the pledge is foreclosed, the corporation shall reissue and deliver the pledged shares to
or at the direction of the pledgee; and
(4) shares which are released from a pledge have the status specified in paragraph (b).
    Subd. 2. Statement of cancellation. If the number of authorized shares of a corporation is
reduced by an acquisition of its shares, the corporation shall, no later than the time it makes its
next annual report to shareholders or, if no report is made, no later than three months after the end
of the fiscal year in which the acquisition occurs, file with the secretary of state a statement of
cancellation showing the reduction in the authorized shares. The statement shall contain:
(a) the name of the corporation;
(b) the number of acquired shares canceled, itemized by classes and series; and
(c) the aggregate number of authorized shares itemized by classes and series, after giving
effect to the cancellation.
    Subd. 3. Limitation on share purchases. Except for redemptions under section 302A.671,
subdivision 6 , a publicly held corporation shall not, directly or indirectly, purchase or agree
to purchase any shares entitled to vote from a person (or two or more persons who act as a
partnership, limited partnership, syndicate, or other group pursuant to any written or oral
agreement, arrangement, relationship, understanding, or otherwise for the purpose of acquiring,
owning, or voting shares of the publicly held corporation) who beneficially owns more than five
percent of the voting power of the publicly held corporation for more than the market value
thereof if the shares have been beneficially owned by the person for less than two years, unless the
purchase or agreement to purchase is approved at a meeting of shareholders by the affirmative
vote of the holders of a majority of the voting power of all shares entitled to vote or the publicly
held corporation makes an offer, of at least equal value per share, to all holders of shares of the
class or series and to all holders of any class or series into which the securities may be converted.
For purposes of determining the period that shares have been beneficially owned by a person:
(1) shares acquired by the person by gift from a donor are deemed to have first become
beneficially owned by the person when the shares were acquired by the donor;
(2) shares acquired by a trust from the settlor of the trust, or shares acquired from the trust by
a beneficiary of the trust, are deemed to have first become beneficially owned by the trust or the
beneficiary when the shares were acquired by the settlor; and
(3) shares acquired by an estate or personal representative as a result of the death or
incapacity of a person, or shares acquired from the estate or personal representative by an heir,
devisee, or beneficiary of the deceased or incapacitated person, are deemed to have first become
beneficially owned by the estate, personal representative, heir, devisee, or beneficiary when the
shares were acquired by the deceased or incapacitated person.
History: 1981 c 270 s 86; 1987 c 104 s 39; 1Sp1987 c 1 s 22,23; 1988 c 692 s 11; 1991 c 58
s 14; 1993 c 17 s 46; 2006 c 250 art 1 s 30