(a)  Notwithstanding anything contained in this chapter to the contrary, except the provisions of § 7-5.2-5, no resident domestic corporation shall engage in any business combination with any interested shareholder of the resident domestic corporation for a period of five (5) years following the interested shareholder’s stock acquisition date unless the business combination or the purchase of stock made by the interested shareholder on the interested shareholder’s stock acquisition date is approved by the board of directors of the resident domestic corporation prior to the interested shareholder’s stock acquisition date.

Terms Used In Rhode Island General Laws 7-5.2-4

  • Affiliate: means a person who directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified person. See Rhode Island General Laws 7-5.2-3
  • Announcement date: when used in reference to any business combination, means the date of the first public announcement of the final, definitive proposal for the business combination. See Rhode Island General Laws 7-5.2-3
  • Associate: when used to indicate a relationship with any person, means:

    (i)  Any corporation or organization of which the person is a director, officer, or partner or is, directly or indirectly, the beneficial owner of ten percent (10%) or more of any class of voting stock;

    (ii)  Any trust or other estate in which the person has a substantial beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity; and

    (iii)  Any relative or spouse of the person, or any relative of the spouse, who has the same residence as the person. See Rhode Island General Laws 7-5.2-3

  • Beneficial owner: when used with respect to any stock, means a person who:

    (i)  Individually, or with or through any of the person's affiliates or associates, beneficially owns the stock, directly or indirectly; or

    (ii)  Individually, or with or through any of the person's affiliates or associates, has:

    (A)  The right to acquire the stock, whether the right is exercisable immediately or only after the passage of time, pursuant to any agreement, arrangement, or understanding, whether or not in writing, or upon the exercise of conversion rights, exchange rights, warrants, or options, or otherwise; provided, however, that a person is not deemed the beneficial owner of stock tendered pursuant to a tender or exchange offer made by the person's affiliates or associates until the tendered stock is accepted for purchase or exchange; or

    (B)  The right to vote the stock pursuant to any agreement, arrangement, or understanding, whether or not in writing; provided, however, that a person is not deemed the beneficial owner of any stock under this item if the agreement, arrangement, or understanding to vote the stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made in accordance with the applicable rules and regulations under the Exchange Act, 15 U. See Rhode Island General Laws 7-5.2-3

  • Business combination: when used in reference to any resident domestic corporation and any interested shareholder of the resident domestic corporation, means:

    (i)  Any merger or consolidation of the resident domestic corporation or any subsidiary of the resident domestic corporation with:

    (A)  The interested shareholder; or

    (B)  Any other corporation, whether or not itself an interested shareholder of the resident domestic corporation, that is, or after the merger or consolidation would be, an affiliate or associate of the interested shareholder;

    (ii)  Any sale, lease, exchange, mortgage, pledge, transfer, or other disposition, in one transaction or a series of transactions, except proportionately as a stockholder of the corporation, to or with the interested shareholder or any affiliate or associate of the interested shareholder, whether as a part of a dissolution or otherwise, of assets of the resident domestic corporation or any subsidiary of the resident domestic corporation:

    (A)  Having an aggregate market value equal to ten percent (10%) or more of the aggregate market value of all the assets, determined on a consolidated basis, of the resident domestic corporation;

    (B)  Having an aggregate market value equal to ten percent (10%) or more of the aggregate market value of all the outstanding stock of the resident domestic corporation; or

    (C)  Representing ten percent (10%) or more of the earning power or net income, determined on a consolidated basis, of the resident domestic corporation;

    (iii)(A)  Any transaction that results in the issuance or transfer by the resident domestic corporation, or by any subsidiary of the resident domestic corporation, of any stock of the resident domestic corporation or of the subsidiary to the interested shareholder, except:

    (I)  Pursuant to the exercise, exchange, or conversion of securities exercisable for, exchangeable for, or convertible into stock of the resident domestic corporation or any subsidiary which securities were outstanding prior to the time that the interested shareholder became such;

    (II)  Pursuant to a dividend or distribution paid or made, or the exercise, exchange, or conversion of securities exercisable for, exchangeable for, or convertible into stock of the resident domestic corporation or any subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the resident domestic corporation subsequent to the time the interested shareholder became such;

    (III)  Pursuant to an exchange offer by the resident domestic corporation to purchase stock made on the same terms to all holders of the stock; or

    (IV)  Any issuance or transfer of stock by the resident domestic corporation;

    (B)  Provided, however, that in no case under subsections (5)(iii)(A)(I) — (IV) shall there be an increase in the interested shareholder's proportionate share of the stock of any class or series of the resident domestic corporation or of the voting stock of the resident domestic corporation;

    (iv)  The adoption of any plan or proposal for the liquidation or dissolution of the resident domestic corporation proposed by, or pursuant to, any agreement, arrangement, or understanding, whether or not in writing, with the interested shareholder or any affiliate or associate of the interested shareholder;

    (v)  Any reclassification of securities, including, without limitation, any stock split, stock dividend, or other distribution of stock in respect to stock, any reverse stock split, or recapitalization of the resident domestic corporation, any merger or consolidation of the resident domestic corporation with any subsidiary of the resident domestic corporation, or any other transaction, whether or not with or into or otherwise involving the interested shareholder, proposed by, or pursuant to any agreement, arrangement, or understanding, whether or not in writing, with the interested shareholder or any affiliate or associate of the interested shareholder, that has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class or series of voting stock or securities convertible into voting stock of the resident domestic corporation or any subsidiary of the resident domestic corporation that is directly or indirectly owned by the interested shareholder or any affiliate or associate of the interested shareholder, except as a result of immaterial changes due to fractional share adjustments; or

    (vi)  Any receipt by the interested shareholder or any affiliate or associate of the interested shareholder of the benefit, directly or indirectly, except proportionately as a shareholder of the resident domestic corporation, of any loans, advances, guarantees, pledges, or other financial assistance, benefits, any tax credits, or other tax advantages provided by or through the resident domestic corporation, except as expressly permitted in subsections (5)(i) through (5)(vi). See Rhode Island General Laws 7-5.2-3

  • Common stock: means any stock other than preferred stock. See Rhode Island General Laws 7-5.2-3
  • 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.
  • Interested shareholder: when used in reference to any resident domestic corporation, means any person, other than the resident domestic corporation or any subsidiary of the resident domestic corporation or any employee benefit plan maintained by the resident domestic corporation, that:

    (i)(A)  Is the beneficial owner, directly or indirectly, of ten percent (10%) or more of the outstanding voting stock of the resident domestic corporation; or

    (B)  Is an affiliate or associate of the resident domestic corporation and at any time within a five-year (5) period immediately prior to the date in question was the beneficial owner, directly or indirectly, of ten percent (10%) or more of the then-outstanding voting stock of the resident domestic corporation. See Rhode Island General Laws 7-5.2-3

  • Market value: when used in reference to stock or property of any resident domestic corporation, means:

    (i)  In the case of stock, the highest closing sale price during the thirty-day (30) period immediately preceding the date in question of a share of stock on the composite tape for stocks listed on the New York Stock Exchange, or, if the stock is not quoted on the composite tape or if the stock is not listed on the exchange, on the principal United States securities exchange registered under the Exchange Act on which the stock is listed, or, if the stock is not listed on any exchange, the highest closing bid quotation with respect to a share of the stock during the thirty-day (30) period preceding the date in question on the National Association of Securities Dealers, Inc. See Rhode Island General Laws 7-5.2-3

  • Resident domestic corporation: means an issuer of voting stock that:

    (i)  Is organized under the laws of this state; and

    (ii)  Either (A) has its principal executive offices and significant business operations located in this state; or (B) has, alone or in combination with one or more of its subsidiaries, at least two hundred fifty (250) employees or twenty-five percent (25%) of the total number of all employees of itself and the subsidiaries employed primarily within the state; and

    (iii)  Has at least five percent (5%) of its voting stock owned beneficially by residents of this state or at least five percent (5%) of its shareholders are residents of this state. See Rhode Island General Laws 7-5.2-3

  • Stock: means :

    (i)  Any stock or similar security, any certificate of interest, any participation in any profit-sharing agreement, any voting trust certificate, or any certificate of deposit for stock; and

    (ii)  Any security convertible, with or without consideration, into stock, or any warrant, call, or other option or privilege of buying stock without being bound to do so, or any other security carrying any right to acquire, subscribe to, or purchase stock. See Rhode Island General Laws 7-5.2-3

  • United States: include the several states and the territories of the United States. See Rhode Island General Laws 43-3-8
  • Voting stock: means shares of capital stock of a corporation entitled to vote generally in the election of directors. See Rhode Island General Laws 7-5.2-3

(b)  Notwithstanding anything contained in this chapter to the contrary, except the provisions of subsection (a) and § 7-5.2-5, no resident domestic corporation shall engage at any time in any business combination with any interested shareholder of the resident domestic corporation other than a business combination specified in any one of subsections (b)(1), (b)(2), or (b)(3):

(1)  A business combination approved by the board of directors of the resident domestic corporation prior to the interested shareholder’s stock acquisition date, or where the purchase of stock made by the interested shareholder on the interested shareholder’s stock acquisition date had been approved by the board of directors of the resident domestic corporation prior to the interested shareholder’s stock acquisition date;

(2)  A business combination approved by the affirmative vote of the holders of two-thirds (?) of the outstanding voting stock not beneficially owned by the interested shareholder or any affiliate or associate of the interested shareholder at a meeting called for that purpose no earlier than five (5) years after the interested shareholder’s stock acquisition date;

(3)  A business combination that meets all of the following conditions:

(i)  The aggregate amount of the cash and the market value as of the consummation date of consideration other than cash to be received per share by holders of outstanding shares of common stock of the resident domestic corporation in the business combination is at least equal to the higher of the following:

(A)  The highest per-share price paid by the interested shareholder at a time when the interested shareholder was the beneficial owner, directly or indirectly, of five percent (5%) or more of the outstanding voting stock of the resident domestic corporation, for any shares of common stock of the same class or series acquired by it within the five-year (5) period immediately prior to the announcement date concerning the business combination, or within the five-year (5) period immediately prior to, or in, the transaction in which the interested shareholder became an interested shareholder, whichever is higher; plus, in either case, interest compounded annually from the earliest date on which the highest per-share acquisition price was paid through the consummation date at the rate for one-year United States treasury obligations from time to time in effect less the aggregate amount of any cash dividends paid, and the market value of any dividends paid other than in cash, per share of common stock since the earliest date, up to the amount of the interest; and

(B)  The market value per share of common stock on the announcement date with respect to the business combination or on the interested shareholder’s stock acquisition date, whichever is higher, plus interest compounded annually from the date through the consummation date at the rate for one-year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividends paid, and the market value of any dividends paid other than in cash, per share of common stock since the date, up to the amount of the interest;

(ii)  The aggregate amount of the cash and the market value as of the consummation date of consideration other than cash to be received per share by holders of outstanding shares of any class or series of stock, other than common stock, of the resident domestic corporation is at least equal to the highest of the following, whether or not the interested shareholder has previously acquired any shares of the class or series of stock:

(A)  The highest per-share price paid by the interested shareholder at a time when he or she was the beneficial owner, directly or indirectly, of five percent (5%) or more of the outstanding voting stock of the resident domestic corporation, for any shares of the class or series of stock acquired by it within the five-year (5) period immediately prior to the announcement date with respect to the business combination, or within the five-year (5) period immediately prior to, or in, the transaction in which the interested shareholder became an interested shareholder, whichever is higher; plus, in either case, interest compounded annually from the earliest date on which the highest per-share acquisition price was paid through the consummation date at the rate for one-year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividend paid, and the market value of any dividends paid other than in cash, per share of the class or series of stock since the earliest date, up to the amount of the interest;

(B)  The highest preferential amount per share to which the holders of shares of the class or series of stock are entitled in the event of any voluntary liquidation, dissolution, or winding up of the resident domestic corporation, plus the aggregate amount of any dividends declared or due to which the holders are entitled prior to payment of dividends on some other class or series of stock (unless the aggregate amount of the dividends is included in the preferential amount); and

(C)  The market value per share of the class or series of stock on the announcement date with respect to the business combination or on the interested shareholder’s stock acquisition date, whichever is higher; plus interest compounded annually from the date through the consummation date at the rate for one-year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividends paid, and the market value of any dividends paid other than in cash, per share of the class or series of stock since the date, up to the amount of the interest;

(iii)  The consideration to be received by holders of a particular class or series of outstanding stock, including common stock, of the resident domestic corporation in the business combination is in cash or in the same form as the interested shareholder has used to acquire the largest number of shares of the class or series of stock previously acquired by it, and the consideration shall be distributed promptly;

(iv)  The holders of all outstanding shares of stock of the resident domestic corporation not beneficially owned by the interested shareholder immediately prior to the consummation of the business combination are entitled to receive in the business combination cash or other consideration for the shares in compliance with subsections (b)(3)(i) through (b)(3)(iii);

(v)  After the interested shareholder’s stock acquisition date and prior to the consummation date of the business combination, the interested shareholder has not become the beneficial owner of any additional shares of voting stock of the resident domestic corporation except:

(A)  As part of the transaction that resulted in the interested shareholder becoming an interested shareholder;

(B)  By virtue of proportionate stock splits, stock dividends, or other distributions of stock in respect of stock not constituting a business combination under § 7-5.2-3(5)(v);

(C)  Through a business combination meeting all of the conditions of this section; or

(D)  Through purchase by the interested shareholder at any price which, if the price had been paid in an otherwise permissible business combination the announcement date and consummation date of which were the date of the purchase, would have satisfied the requirements of subsections (b)(3)(i) through (b)(3)(iii) of this section.

History of Section.
P.L. 1990, ch. 138, § 1; P.L. 1991, ch. 422, § 1.