Tennessee Code 48-28-104 – Restriction on merger, share exchange or conversion of for-profit corporation that is not for-profit benefit corporation with or into for-profit benefit corporation – Limitations upon mergers, share exchanges or conversions…
Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
Business: includes every trade, occupation, profession, investment activity and other lawful purpose for gain or the preservation of assets whether or not carried on for profits. See Tennessee Code 48-202-101
Charter: includes amended and restated charters and articles of merger. See Tennessee Code 48-11-201
Class: when used with reference to membership interests, means a category of membership interests that differs in one (1) or more rights or preferences from another category of membership interests of the LLC. See Tennessee Code 48-202-101
Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
For-profit benefit corporation: means a domestic business corporation organized under and subject to the Tennessee Business Corporation Act, compiled in chapters 11-27 of this title that intends to pursue a public benefit or public benefits. See Tennessee Code 48-28-103
Foreign for-profit benefit corporation: means a for-profit corporation incorporated under a law other than the laws of this state that intends, as stated in its charter or similar governing instrument, to pursue a public benefit or public benefits and has, under that law, the status of a for-profit benefit corporation or its substantial equivalent. See Tennessee Code 48-28-103
Public benefit: means a positive effect or reduction of negative effects on one (1) or more categories of persons, entities, communities, or interests, other than shareholders in their capacities as shareholders, including, but not limited to, an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific, or technological effect. See Tennessee Code 48-28-103
Share: means the unit into which the proprietary interests in a corporation are divided. See Tennessee Code 48-11-201
Shareholder: means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. See Tennessee Code 48-11-201
State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
(1) Notwithstanding the Tennessee BusinessCorporation Act, compiled in chapters 11-27 of this title, a domestic for-profit corporation that is not a for-profit benefit corporation shall not, without the approval of two-thirds (2/3) of the outstanding shares of each class of the stock of the corporation of which there are outstanding shares, whether voting or nonvoting:
(A) Amend its charter to include a provision authorized by subsection (e); or(B) Merge with or into, or consummate a plan of share exchange under § 48-21-103 with, a for-profit benefit corporation or foreign for-profit benefit corporation if, as a result of the merger or share exchange, the shares in the domestic for-profit corporation would become, or be converted into or exchanged for the right to receive, shares or other equity interests in a for-profit benefit corporation or foreign for-profit benefit corporation.(2) The restrictions of this subsection (a) shall not apply prior to the time that the corporation has received payment for any of its capital stock.(b) Any shareholder of a domestic for-profit corporation that holds shares of stock of the domestic for-profit corporation immediately prior to the effective time of the following actions shall be entitled to dissent and obtain payment for the shareholder’s shares under chapter 23 of this title; provided, that such shareholder has neither voted in favor of the amendment or the merger or plan of share exchange nor consented to in writing pursuant to § 48-17-104:
(1) An amendment to the corporation’s charter to include a provision authorized by subsection (e); or(2) A merger or consummation of a plan of share exchange under § 48-21-103 that would result in the conversion of the domestic for-profit corporation’s stock into or the exchange of the corporation’s stock for the right to receive shares or other equity interests in a foreign for-profit benefit corporation.(c) Notwithstanding the Tennessee Business Corporation Act, compiled in chapters 11-27 of this title, a corporation that is a for-profit benefit corporation shall not, without the approval of two-thirds (2/3) of the outstanding shares of each class of the stock of the corporation of which there are outstanding shares, whether voting or nonvoting:
(1) Amend its charter to delete or amend a public benefit provision authorized by subsection (e);(2) Merge with or into another entity if the surviving entity of the merger is not a for-profit benefit corporation or foreign for-profit benefit corporation;(3) Merge with or into another entity that is a for-profit benefit corporation or foreign for-profit benefit corporation unless the charter or similar governing instrument of the surviving entity states that one (1) or more of its public benefit purposes is the same or substantially the same as the public benefit purpose or purposes of the for-profit benefit corporation merging with or into such other entity as of immediately prior to the merger;(4) Consummate a plan of share exchange under § 48-21-103 with another entity that is not a for-profit benefit corporation or foreign for-profit benefit corporation; or(5) Convert under § 48-21-109 to another form of entity.(d) A for-profit benefit corporation shall be managed in a manner that considers the best interests of those materially affected by the corporation’s conduct, including the pecuniary interests of shareholders, and the public benefit or public benefits identified in its charter.(e) The charter of a for-profit benefit corporation shall:
(1) Notwithstanding § 48-12-102(b)(2)(A), include a statement regarding the purpose or purposes for which the corporation is organized including one (1) or more public benefits to be pursued by the corporation; and(2)State within its heading that it is a for-profit benefit corporation.
