2006 Minnesota Statutes

302A.671 CONTROL SHARE ACQUISITIONS.
    Subdivision 1. Application. (a) Unless otherwise expressly provided in the articles or in
bylaws approved by the shareholders of an issuing public corporation, this section applies to a
control share acquisition. A shareholder's proposal to amend the corporation's articles or bylaws
to cause this section to be inapplicable to the corporation requires the vote set forth in subdivision
4a, paragraph (b), in order for it to be effective, unless it is approved by a committee of the board
comprised solely of directors who:
(1) are neither officers nor employees of, nor were during the five years preceding the
formation of the committee officers or employees of, the corporation or a related organization;
(2) are neither acquiring persons nor affiliates or associates of an acquiring person;
(3) were not nominated for election as directors by an acquiring person or an affiliate or
associate of an acquiring person; and
(4) were directors at the time an acquiring person became an acquiring person or were
nominated, elected, or recommended for election as directors by a majority of those directors.
(b) The shares of an issuing public corporation acquired by an acquiring person in a control
share acquisition that exceed the threshold of voting power of any of the ranges specified in
subdivision 2, paragraph (d), shall have only the voting rights as shall be accorded to them
pursuant to subdivision 4a.
    Subd. 2. Information statement. An acquiring person shall deliver to the issuing public
corporation at its principal executive office an information statement containing all of the
following:
(a) the identity and background of the acquiring person, including the identity and
background of each member of any partnership, limited partnership, syndicate, or other group
constituting the acquiring person, and the identity and background of each affiliate and associate
of the acquiring person, including the identity and background of each affiliate and associate
of each member of such partnership, syndicate, or other group; provided, however, that with
respect to a limited partnership, the information need only be given with respect to a partner
who is denominated or functions as a general partner and each affiliate and associate of the
general partner;
(b) a reference that the information statement is made under this section;
(c) the number and class or series of shares of the issuing public corporation beneficially
owned, directly or indirectly, before the control share acquisition by each of the persons identified
pursuant to paragraph (a);
(d) the number and class or series of shares of the issuing public corporation acquired or
proposed to be acquired pursuant to the control share acquisition by each of the persons identified
pursuant to paragraph (a) and specification of which of the following ranges of voting power in
the election of directors that, except for this section, resulted or would result from consummation
of the control share acquisition:
(1) at least 20 percent but less than 33-1/3 percent;
(2) at least 33-1/3 percent but less than or equal to 50 percent;
(3) over 50 percent; and
(e) the terms of the control share acquisition or 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; plans or proposals of the acquiring
person (including plans or proposals under consideration) to (1) liquidate or dissolve the issuing
public corporation, (2) sell all or a substantial part of its assets, or merge it or exchange its
shares with any other person, (3) change the location of its principal place of business or its
principal executive office or of a material portion of its business activities, (4) change materially
its management or policies of employment, (5) change materially its charitable or community
contributions or its policies, programs, or practices relating thereto, (6) change materially its
relationship with suppliers or customers or the communities in which it operates, or (7) make
any other material change in its business, corporate structure, management or personnel; and
other objective facts as would be substantially likely to affect the decision of a shareholder with
respect to voting on the control share acquisition.
If any material change occurs in the facts set forth in the information statement, including
but not limited to any material increase or decrease in the number of shares of the issuing public
corporation acquired or proposed to be acquired by the persons identified pursuant to paragraph
(a), the acquiring person shall promptly deliver to the issuing public corporation at its principal
executive office an amendment to the information statement containing information relating to the
material change. An increase or decrease or proposed increase or decrease equal, in the aggregate
for all persons identified pursuant to paragraph (a), to one percent or more of the total number
of outstanding shares of any class or series of the issuing public corporation shall be deemed
"material" for purposes of this paragraph; an increase or decrease or proposed increase or decrease
of less than this amount may be material, depending upon the facts and circumstances.
    Subd. 3. Meeting of shareholders. If the acquiring person so requests in writing at the time
of delivery of an information statement pursuant to subdivision 2, and has made, or has made a
bona fide written offer to make, a control share acquisition and gives a written undertaking to pay
or reimburse the issuing public corporation's expenses of a special meeting, except the expenses
of the issuing public corporation in opposing according voting rights with respect to shares
acquired or to be acquired in the control share acquisition, within ten days after receipt by the
issuing public corporation of the information statement, a special meeting of the shareholders of
the issuing public corporation shall be called pursuant to section 302A.433, subdivision 1, for the
sole purpose of considering the voting rights to be accorded to shares referred to in subdivision 1,
paragraph (b), acquired or to be acquired pursuant to the control share acquisition. The special
meeting shall be held no later than 55 days after receipt of the information statement and written
undertaking to pay or reimburse the issuing public corporation's expenses of the special meeting,
unless the acquiring person agrees to a later date. If the acquiring person so requests in writing at
the time of delivery of the information statement, (1) the special meeting shall not be held sooner
than 30 days after receipt by the issuing public corporation of the information statement and (2)
the record date for the meeting must be at least 30 days prior to the date of the meeting. If no
request for a special meeting is made, consideration of the voting rights to be accorded to shares
referred to in subdivision 1, paragraph (b), acquired or to be acquired pursuant to the control
share acquisition shall be presented at the next special or annual meeting of the shareholders of
which notice has not been given, unless prior thereto the matter of the voting rights becomes
moot. The issuing public corporation is not required to have the voting rights to be accorded to
shares acquired or to be acquired according to a control share acquisition considered at the next
special or annual meeting of the shareholders unless it has received the information statement
and documents required by subdivision 4 at least 55 days before the meeting. The notice of
the meeting shall at a minimum be accompanied by a copy of the information statement (and
a copy of any amendment to the information statement previously delivered to the issuing
public corporation) and a statement disclosing that the board of the issuing public corporation
recommends approval of, expresses no opinion and is remaining neutral toward, recommends
rejection of, or is unable to take a position with respect to according voting rights to shares
referred to in subdivision 1, paragraph (b), acquired or to be acquired in the control share
acquisition. The notice of meeting shall be given at least ten days prior to the meeting. Any
amendments to the information statement received after mailing of the notice of the meeting must
be mailed promptly to the shareholders by the issuing public corporation.
    Subd. 4. Financing. Notwithstanding anything to the contrary contained in this chapter, no
call of a special meeting of the shareholders of the issuing public corporation shall be made
pursuant to subdivision 3 and no consideration of the voting rights to be accorded to shares
referred to in subdivision 1, paragraph (b), acquired or to be acquired pursuant to a control
share acquisition shall be presented at any special or annual meeting of the shareholders of the
issuing public corporation unless at the time of delivery of the information statement pursuant
to subdivision 2, the acquiring person shall have entered into, and shall deliver to the issuing
public corporation a copy or copies of, a definitive financing agreement or definitive financing
agreements, with one or more responsible financial institutions or other entities having the
necessary financial capacity, for any financing of the control share acquisition not to be provided
by funds of the acquiring person. A financing agreement is not deemed not definitive for purposes
of this subdivision solely because it contains conditions or contingencies customarily contained in
term loan agreements with financial institutions.
    Subd. 4a. Voting rights. (a) Shares referred to in subdivision 1, paragraph (b), acquired in a
control share acquisition shall have the same voting rights as other shares of the same class or
series only if approved by resolution of shareholders of the issuing public corporation at a special
or annual meeting of shareholders pursuant to subdivision 3.
(b) The resolution of shareholders must be approved by (1) the affirmative vote of the holders
of a majority of the voting power of all shares entitled to vote including all shares held by the
acquiring person, and (2) the affirmative vote of the holders of a majority of the voting power of
all shares entitled to vote excluding all interested shares. A class or series of shares of the issuing
public corporation is entitled to vote separately 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 separately as a class or series.
(c) To have the voting rights accorded by approval of a resolution of shareholders, any
proposed control share acquisition not consummated prior to the time of the shareholder approval
must be consummated within 180 days after the shareholder approval.
(d) Any shares referred to in subdivision 1, paragraph (b), acquired in a control share
acquisition that do not have voting rights accorded to them by approval of a resolution of
shareholders shall regain their voting rights upon transfer to a person other than the acquiring
person or any affiliate or associate of the acquiring person unless the acquisition of the shares
by the other person constitutes a control share acquisition, in which case the voting rights of the
shares are subject to the provisions of this section.
    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. Redemption. Unless otherwise expressly provided in the articles or in bylaws
approved by the shareholders of an issuing public corporation, the issuing public corporation shall
have the option to call for redemption all but not less than all shares referred to in subdivision 1,
paragraph (b), acquired in a control share acquisition, at a redemption price equal to the market
value of the shares at the time the call for redemption is given, in the event (1) an information
statement has not been delivered to the issuing public corporation by the acquiring person by the
tenth day after the control share acquisition, or (2) an information statement has been delivered
but the shareholders have voted not to accord voting rights to such shares pursuant to subdivision
4a, paragraph (b). The call for redemption shall be given by the issuing public corporation within
30 days after the event giving the issuing public corporation the option to call the shares for
redemption and the shares shall be redeemed within 60 days after the call is given.
History: 1984 c 488 s 18; 1Sp1985 c 5 s 19; 1986 c 431 s 2; 1Sp1987 c 1 s 24; 1988 c 692 s
12-16; 1989 c 172 s 8; 1993 c 17 s 52; 1997 c 10 art 1 s 30; 1999 c 85 art 1 s 15