Text: HF00627 Text: HF00629 Text: HF00600 - HF00699 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 HOUSE FILE 628 1 2 1 3 AN ACT 1 4 RELATING TO CORPORATIONS BY PROVIDING FOR THE CALL OF 1 5 SPECIAL MEETINGS OF SHAREHOLDERS, FOR THE COMBINATION 1 6 OF A CORPORATION AND CERTAIN SHAREHOLDERS, AND FOR 1 7 CERTAIN MERGER AND SHARE ACQUISITIONS. 1 8 1 9 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 1 10 1 11 Section 1. Section 490.702, subsection 1, unnumbered 1 12 paragraph 1, Code 1997, is amended to read as follows: 1 13AExcept as provided in subsection 5, a corporation shall 1 14 hold a special meeting of shareholders upon the occurrence of 1 15 either of the following: 1 16 Sec. 2. Section 490.702, Code 1997, is amended by adding 1 17 the following new subsection: 1 18 NEW SUBSECTION. 5. Notwithstanding subsections 1 through 1 19 4, a corporation which has a class of voting stock that is 1 20 listed on a national securities exchange, authorized for 1 21 quotation on the national association of securities dealers 1 22 automated quotations-national market system, or held of record 1 23 by more than two thousand shareholders, is required to hold a 1 24 special meeting only upon the occurrence of either of the 1 25 following: 1 26 a. On call of its board of directors or the person or 1 27 persons authorized to call a special meeting by the articles 1 28 of incorporation or bylaws. 1 29 b. If the holders of at least fifty percent of all the 1 30 votes entitled to be cast on any issue proposed to be 1 31 considered at the proposed special meeting sign, date, and 1 32 deliver to the corporation's secretary one or more written 1 33 demands for the meeting describing the purpose or purposes for 1 34 which it is to be held. 1 35 Sec. 3. Section 490.1101, Code 1997, is amended by adding 2 1 the following new subsection: 2 2 NEW SUBSECTION. 4. One or more business entities 2 3 organized under Title XII or XIII may merge with or into a 2 4 corporation organized under this chapter, and a corporation 2 5 organized under this chapter may merge with or into such 2 6 business entity or entities, if the entity or entities are 2 7 authorized to merge with such corporation pursuant to the 2 8 chapter under which the entity or entities are organized. 2 9 Except as otherwise provided, this division applies to such 2 10 mergers. 2 11 Sec. 4. Section 490.1102, Code 1997, is amended by adding 2 12 the following new subsection: 2 13 NEW SUBSECTION. 5. One or more business entities 2 14 organized under Title XII or XIII may acquire all of the 2 15 outstanding shares of one or more classes or series of a 2 16 corporation organized under this chapter, and a corporation 2 17 organized under this chapter may acquire all of the 2 18 outstanding ownership interests in such business entity or 2 19 entities, if the entity or entities are authorized to enter 2 20 into such share exchange with such corporation pursuant to the 2 21 chapter under which the entity or entities are organized. 2 22 Except as otherwise provided, this division applies to such 2 23 exchange. 2 24 Sec. 5. NEW SECTION. 490.1109 BUSINESS COMBINATIONS WITH 2 25 INTERESTED SHAREHOLDERS. 2 26 1. Notwithstanding any other provision of this chapter, a 2 27 corporation shall not engage in any business combination with 2 28 an interested shareholder for a period of three years 2 29 following the time that the shareholder became an interested 2 30 shareholder, unless any of the following apply: 2 31 a. Prior to the time the shareholder became an interested 2 32 shareholder, the board of directors of the corporation 2 33 approved either the business combination or the transaction 2 34 which resulted in the shareholder becoming an interested 2 35 shareholder. 3 1 b. Upon consummation of the transaction which resulted in 3 2 the shareholder becoming an interested shareholder, the 3 3 interested shareholder owned at least eighty-five percent of 3 4 the voting stock of the corporation outstanding at the time 3 5 the transaction commenced, excluding, for purposes of 3 6 determining the number of shares outstanding, those shares 3 7 owned by persons who are directors and officers, and by 3 8 employee stock plans in which employee participants do not 3 9 have the right to determine confidentially whether shares held 3 10 subject to the plan will be tendered in a tender or exchange 3 11 offer. 3 12 c. At or subsequent to the time the shareholder became an 3 13 interested shareholder, the business combination is approved 3 14 by the board of directors and authorized at an annual or 3 15 special meeting of shareholders by the affirmative vote of at 3 16 least sixty-six and two-thirds percent of the outstanding 3 17 voting stock which is not owned by the interested shareholder. 3 18 Such approval shall not be by written consent. 3 19 2. This section does not apply in any of the following 3 20 circumstances: 3 21 a. The corporation does not have a class of voting stock 3 22 that is listed on a national securities exchange, authorized 3 23 for quotation on the national association of securities 3 24 dealers automated quotations-national market system, or held 3 25 of record by more than two thousand shareholders, unless any 3 26 of the foregoing results from action taken, directly or 3 27 indirectly, by an interested shareholder or from a transaction 3 28 in which a person becomes an interested shareholder. 3 29 b. The corporation's original articles of incorporation 3 30 contain a provision expressly electing not to be governed by 3 31 this section. 3 32 c. The corporation, by action of its board of directors, 3 33 adopts an amendment to its bylaws by no later than September 3 34 29, 1997, expressly electing not to be governed by this 3 35 section, which amendment shall not be further amended by the 4 1 board of directors. 4 2 d. The corporation, by action of its shareholders, adopts 4 3 an amendment to its articles of incorporation or bylaws 4 4 expressly electing not to be governed by this section, 4 5 provided that, in addition to any other vote required by law, 4 6 such amendment to the articles of incorporation or bylaws must 4 7 be approved by the affirmative vote of a majority of the 4 8 shares entitled to vote. An amendment adopted pursuant to 4 9 this paragraph is effective immediately in the case of a 4 10 corporation that has never had a class of voting stock that 4 11 falls within any of the three categories set out in paragraph 4 12 "a" and has not elected by a provision in its original 4 13 articles of incorporation or any amendment to such articles to 4 14 be governed by this section. In all other cases, an amendment 4 15 adopted pursuant to this paragraph is not effective until 4 16 twelve months after the adoption of the amendment and does not 4 17 apply to any business combination between the corporation and 4 18 any person who became an interested shareholder of the 4 19 corporation on or prior to such adoption. 4 20 An amendment to the bylaws adopted pursuant to this 4 21 paragraph shall not be further amended by the board of 4 22 directors. 4 23 e. A shareholder becomes an interested shareholder 4 24 inadvertently and both of the following apply: 4 25 (1) As soon as practicable the shareholder divests itself 4 26 of ownership of sufficient shares so that the shareholder 4 27 ceases to be an interested shareholder. 4 28 (2) The shareholder would not, at any time within the 4 29 three-year period immediately prior to a business combination 4 30 between the corporation and such shareholder, have been an 4 31 interested shareholder but for the inadvertent acquisition of 4 32 ownership. 4 33 f. (1) The business combination is proposed prior to the 4 34 consummation or abandonment of and subsequent to the earlier 4 35 of the public announcement or the notice required in this 5 1 paragraph of a proposed transaction which satisfies all of the 5 2 following: 5 3 (a) Constitutes a transaction described in subparagraph 5 4 (2). 5 5 (b) Is with or by a person who either was not an 5 6 interested shareholder during the previous three years or who 5 7 became an interested shareholder with the approval of the 5 8 corporation's board of directors or who became an interested 5 9 shareholder during the time period described in paragraph "g". 5 10 (c) Is approved or not opposed by a majority of the 5 11 members of the board of directors then in office who were 5 12 directors prior to any person becoming an interested 5 13 shareholder during the previous three years, or who were 5 14 recommended for election or elected to succeed such directors 5 15 by a majority of such directors. 5 16 (2) A proposed transaction under subparagraph (1) is 5 17 limited to the following: 5 18 (a) A merger of the corporation, other than a merger 5 19 pursuant to section 490.1104. 5 20 (b) A sale, lease, exchange, mortgage, pledge, transfer, 5 21 or other disposition, in one or more transactions and whether 5 22 as part of a dissolution or otherwise, of assets of the 5 23 corporation or of any direct or indirect majority-owned 5 24 subsidiary of the corporation, other than to a direct or 5 25 indirect wholly owned subsidiary of the corporation or to the 5 26 corporation itself, which has an aggregate market value equal 5 27 to fifty percent or more of either the aggregate market value 5 28 of all of the assets of the corporation determined on a 5 29 consolidated basis, or the aggregate market value of all the 5 30 outstanding stock of the corporation. 5 31 (c) A proposed tender or exchange offer for fifty percent 5 32 or more of the outstanding voting stock of the corporation. 5 33 (3) The corporation shall give no less than twenty days' 5 34 notice to all interested shareholders prior to the 5 35 consummation of any of the transactions described in 6 1 subparagraph (2), subparagraph subdivision (a) or (b). 6 2 g. The business combination is with an interested 6 3 shareholder who becomes an interested shareholder of the 6 4 corporation at a time when the corporation is not subject to 6 5 this section pursuant to paragraphs "a" through "d". 6 6 Notwithstanding paragraphs "a" through "d", a corporation 6 7 may elect under its original articles of incorporation or any 6 8 amendment to such articles to be subject to this section. 6 9 However, such amendment shall not apply to restrict a business 6 10 combination between the corporation and an interested 6 11 shareholder of the corporation if the interested shareholder 6 12 became such prior to the effective date of the amendment. 6 13 3. As used in this section, unless the context otherwise 6 14 requires: 6 15 a. "Affiliate" means a person that directly, or 6 16 indirectly, through one or more intermediaries, controls, or 6 17 is controlled by, or is under common control with, another 6 18 person. 6 19 b. "Associate", when used to indicate a relationship with 6 20 a person, means any of the following: 6 21 (1) A corporation, partnership, unincorporated 6 22 association, or other entity of which the person is a 6 23 director, officer, or partner or is, directly or indirectly, 6 24 the owner of twenty percent or more of any class of voting 6 25 stock. 6 26 (2) A trust or other estate in which the person has at 6 27 least a twenty percent beneficial interest or as to which such 6 28 person serves as trustee or in a similar fiduciary capacity. 6 29 (3) A relative or spouse of the person, or any relative of 6 30 the spouse, who has the same residence as the person. 6 31 c. "Business combination", with respect to a corporation 6 32 and an interested shareholder of such corporation, means any 6 33 of the following: 6 34 (1) A merger or consolidation of the corporation or any 6 35 direct or indirect majority-owned subsidiary of the 7 1 corporation with the interested shareholder, or with any other 7 2 corporation, partnership, unincorporated association, or other 7 3 entity if the merger or consolidation is caused by the 7 4 interested shareholder and as a result of such merger the 7 5 surviving entity is not subject to subsection 1. 7 6 (2) A sales, lease, exchange, mortgage, pledge, transfer, 7 7 or other disposition, in one transaction or a series of 7 8 transactions, except proportionately as a shareholder of such 7 9 corporation, to or with the interested shareholder, whether as 7 10 part of a dissolution or otherwise, of assets of the 7 11 corporation or of any direct or indirect majority-owned 7 12 subsidiary of the corporation which assets have an aggregate 7 13 market value equal to ten percent or more of either the 7 14 aggregate market value of all the assets of the corporation 7 15 determined on a consolidated basis or the aggregate market 7 16 value of all the outstanding stock of the corporation. 7 17 (3) A transaction which results in the issuance or 7 18 transfer by the corporation or by any direct or indirect 7 19 majority-owned subsidiary of the corporation of any stock of 7 20 the corporation or of such subsidiary to the interested 7 21 shareholder, except for the following: 7 22 (a) Pursuant to the exercise, exchange, or conversion of 7 23 securities exercisable for, exchangeable for, or convertible 7 24 into stock of the corporation or such subsidiary which 7 25 securities were outstanding prior to the time that the 7 26 interested shareholder became an interested shareholder. 7 27 (b) Pursuant to a merger under section 490.1104. 7 28 (c) Pursuant to a distribution paid or made, or the 7 29 exercise, exchange, or conversion of securities exercisable 7 30 for, exchangeable for, or convertible into stock of such 7 31 corporation or any such subsidiary, which stock is distributed 7 32 pro rata to all holders of a class or series of stock of the 7 33 corporation subsequent to the time the interested shareholder 7 34 became an interested shareholder. 7 35 (d) Pursuant to an exchange offer by the corporation to 8 1 purchase stock made on the same terms to all holders of the 8 2 stock. 8 3 (e) Any issuance or transfer of stock by the corporation, 8 4 provided, however, that in no case under subparagraph 8 5 subdivisions (c) and (d) and this subparagraph subdivision 8 6 shall there be an increase in the interested shareholder's 8 7 proportionate share of the stock of any class or series of the 8 8 corporation or of the voting stock of the corporation. 8 9 (4) A transaction involving the corporation or any direct 8 10 or indirect majority-owned subsidiary of the corporation which 8 11 has the effect, directly or indirectly, of increasing the 8 12 proportionate share of the stock of any class or series, or 8 13 securities convertible into the stock of any class or series, 8 14 of the corporation or of any such subsidiary which is owned by 8 15 the interested shareholder, except as a result of immaterial 8 16 changes due to fractional share adjustments or as a result of 8 17 any purchase or redemption of any shares of stock not caused, 8 18 directly or indirectly, by the interested shareholder. 8 19 (5) The receipt by the interested shareholder of the 8 20 benefit, directly or indirectly, except proportionately as a 8 21 shareholder of such corporation, of any loans, advances, 8 22 guarantees, pledges, or other financial benefits, other than 8 23 those expressly permitted in subparagraphs (1) through (4), 8 24 provided by or through the corporation or any direct or 8 25 indirect majority-owned subsidiary. 8 26 d. "Control", including the terms "controlling", 8 27 "controlled by", and "under common control with", means the 8 28 ability, directly or indirectly, to direct or cause the 8 29 direction of the management and policies of a person, whether 8 30 through the ownership of voting stock, by contract, or 8 31 otherwise. A person who is the owner of twenty percent or 8 32 more of the outstanding voting stock of any corporation, 8 33 partnership, unincorporated association, or other entity is 8 34 presumed to have control of such entity, in the absence of 8 35 proof by a preponderance of the evidence to the contrary. 9 1 Notwithstanding this paragraph, a presumption of control shall 9 2 not apply where a person holds voting stock, in good faith and 9 3 not for the purpose of circumventing this section, as an 9 4 agent, bank, broker, nominee, custodian, or trustee for one or 9 5 more owners who do not individually or as a group have control 9 6 of such entity. 9 7 e. "Interested shareholder" means any person, other than 9 8 the corporation and any direct or indirect majority-owned 9 9 subsidiary of the corporation, that is the owner of fifteen 9 10 percent or more of the outstanding voting stock of the 9 11 corporation, or is an affiliate or associate of the 9 12 corporation and was the owner of fifteen percent or more of 9 13 the outstanding voting stock of the corporation at any time 9 14 within the three-year period immediately prior to the date on 9 15 which it is sought to be determined whether such person is an 9 16 interested shareholder, and the affiliates and associates of 9 17 such person. "Interested shareholder" does not include either 9 18 of the following: 9 19 (1) A person who owns shares in excess of the fifteen 9 20 percent limitation and who acquired such shares as follows: 9 21 (a) Pursuant to a tender offer commenced prior to January 9 22 1, 1998, or pursuant to an exchange offer announced prior to 9 23 January 1, 1998, and commenced within ninety days after such 9 24 date, if such person satisfies either of the following: 9 25 (i) Continues to own shares in excess of the fifteen 9 26 percent limitation or would continue to own such shares but 9 27 for action taken by the corporation. 9 28 (ii) Is an affiliate or associate of the corporation and 9 29 continues, or would continue but for action taken by the 9 30 corporation, to be the owner of fifteen percent or more of the 9 31 outstanding voting stock of the corporation at any time within 9 32 the three-year period immediately prior to the date on which 9 33 it is sought to be determined whether such person is an 9 34 interested shareholder. 9 35 (b) From a person subject to subparagraph subdivision (a) 10 1 by gift, devise, or in a transaction in which no consideration 10 2 for the shares was exchanged. 10 3 (2) A person whose ownership of shares in excess of the 10 4 fifteen percent limitation is the result of action taken 10 5 solely by the corporation, provided that such person is an 10 6 interested shareholder if, after such action by the 10 7 corporation, the person acquires additional shares of voting 10 8 stock of the corporation, other than as a result of further 10 9 corporate action not caused, directly or indirectly, by such 10 10 person. 10 11 For purposes of determining whether a person is an 10 12 interested shareholder, the outstanding voting stock of the 10 13 corporation does not include any other unissued stock of the 10 14 corporation which may be issuable pursuant to any agreement, 10 15 arrangement, or understanding, or upon exercise of conversion 10 16 rights, warrants, or options, or otherwise. 10 17 f. "Owner", including the terms "own" and "owned" when 10 18 used with respect to any stock, means a person that 10 19 individually or with or through any of such person's 10 20 affiliates or associates satisfies any of the following: 10 21 (1) Beneficially owns such stock, directly or indirectly. 10 22 (2) Has the right to do either of the following: 10 23 (a) Acquire such stock, whether such right is exercisable 10 24 immediately or only after the passage of time, pursuant to any 10 25 agreement, arrangement, or understanding, or upon the exercise 10 26 of conversion rights, exchange rights, warrants, or options, 10 27 or otherwise. However, a person is not deemed the owner of 10 28 stock tendered pursuant to a tender or exchange offer made by 10 29 such person or any of such person's affiliates or associates 10 30 until such tendered stock is accepted for purchase or 10 31 exchange. 10 32 (b) Vote such stock pursuant to any agreement, 10 33 arrangement, or understanding. However, a person is not 10 34 deemed the owner of any stock because of such person's right 10 35 to vote such stock if the agreement, arrangement, or 11 1 understanding to vote such stock arises solely from the 11 2 revocable proxy or consent given in response to a proxy or 11 3 consent solicitation made to ten or more persons. 11 4 (3) Has any agreement, arrangement, or understanding for 11 5 the purpose of acquiring, holding, voting, or disposing of 11 6 such stock with any other person who beneficially owns, or 11 7 whose affiliates or associates beneficially own, directly or 11 8 indirectly, such stock. However, an agreement, arrangement, 11 9 or understanding for the purpose of voting such stock does not 11 10 include voting pursuant to a revocable proxy or consent under 11 11 subparagraph (2), subparagraph subdivision (b). 11 12 g. "Person" means any individual, corporation, 11 13 partnership, unincorporated association, or other entity. 11 14 h. "Stock" means, with respect to any corporation, capital 11 15 stock and, with respect to any other entity, any equity 11 16 interest. 11 17 i. "Voting stock" means, with respect to any corporation, 11 18 stock of any class or series entitled to vote generally in the 11 19 election of directors and, with respect to any entity that is 11 20 not a corporation, any equity interest entitled to vote 11 21 generally in the election of the governing body of such 11 22 entity. 11 23 4. The articles of incorporation or bylaws shall not 11 24 require, for any vote of shareholders required by this 11 25 section, a greater vote of shareholders than that specified in 11 26 this section. 11 27 11 28 11 29 11 30 RON J. CORBETT 11 31 Speaker of the House 11 32 11 33 11 34 11 35 MARY E. KRAMER 12 1 President of the Senate 12 2 12 3 I hereby certify that this bill originated in the House and 12 4 is known as House File 628, Seventy-seventh General Assembly. 12 5 12 6 12 7 12 8 ELIZABETH ISAACSON 12 9 Chief Clerk of the House 12 10 Approved , 1997 12 11 12 12 12 13 12 14 TERRY E. BRANSTAD 12 15 Governor
Text: HF00627 Text: HF00629 Text: HF00600 - HF00699 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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