Download Zipped Introduced WP 8.0 HB0353.ZIP 8,936 Bytes
[Status][Bill Documents][Fiscal Note][Bills Directory]

H.B. 353

             1     

CONTROL SHARES ACQUISITION

             2     
2000 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: John E. Swallow

             5      AN ACT RELATING TO CONTROL SHARES ACQUISITIONS; CLARIFYING THE
             6      DEFINITION OF CONTROL SHARES; AND MAKING TECHNICAL CHANGES.
             7      This act affects sections of Utah Code Annotated 1953 as follows:
             8      AMENDS:
             9          61-6-2, as last amended by Chapter 268, Laws of Utah 1995
             10          61-6-3, as last amended by Chapter 268, Laws of Utah 1995
             11          61-6-5, as enacted by Chapter 2, Laws of Utah 1987, First Special Session
             12      Be it enacted by the Legislature of the state of Utah:
             13          Section 1. Section 61-6-2 is amended to read:
             14           61-6-2. "Control shares" defined.
             15          (1) (a) As used in this chapter, "control shares" means shares that except for this chapter
             16      would have voting power with respect to shares of an issuing public corporation that, when added
             17      to all other shares of the issuing public corporation owned by a person or in respect to which that
             18      person may exercise or direct the exercise of voting power, would entitle that person, immediately
             19      after acquisition of the shares (directly or indirectly, alone or as a part of a group), to exercise or
             20      direct the exercise of the voting power, including voting power pursuant to a revocable proxy, of
             21      the issuing public corporation in the election of directors within any of the following ranges of
             22      voting power:
             23          [(1)] (i) 1/5 or more but less than 1/3 of all voting power;
             24          [(2)] (ii) 1/3 or more but less than a majority of all voting power; or
             25          [(3)] (iii) a majority or more of all voting power.
             26          (b) Shares entitling a person, immediately after acquisition of the shares (directly or
             27      indirectly, including pursuant to a revocable proxy or as part of a group), to exercise or direct the


             28      exercise of less than 1/5 of all voting power of the issuing public corporation in the election of
             29      directors shall not be control shares, even if acquired in a control share acquisition. Shares cease
             30      to be control shares upon their transfer to a person who is not an affiliate of the transferor or an
             31      affiliate or member of a group with which the applicable control share acquisition was made,
             32      except to the extent the shares become control shares as a result of their acquisition by the
             33      transferee.
             34          Section 2. Section 61-6-3 is amended to read:
             35           61-6-3. Control share acquisition defined.
             36          (1) (a) As used in this chapter, "control share acquisition" means:
             37          (i) the acquisition, directly or indirectly, by any person of ownership of issued and
             38      outstanding control shares; or
             39          (ii) the acquisition of power to direct the exercise of voting power with respect to issued
             40      and outstanding control shares, including the acquisition of voting power pursuant to a revocable
             41      proxy except as provided in Subsection (1)(b).
             42          (b) "Control share acquisition" does not mean the acquisition of voting power pursuant to
             43      a revocable proxy if the revocable proxy is solicited by the issuing public corporation or the board
             44      of directors of the issuing public corporation in connection with shareholders' meetings or actions
             45      of the issuing public corporation.
             46          (2) For purposes of this section, shares acquired within 90 days or shares acquired pursuant
             47      to a plan to make a control share acquisition are considered to have been acquired in the same
             48      acquisition.
             49          (3) For purposes of this section, a person who acquires shares in the ordinary course of
             50      business for the benefit of others in good faith and not for the purpose of circumventing this
             51      chapter has voting power only of shares in respect of which that person would be able to exercise
             52      or direct the exercise of votes without further instruction from others.
             53          (4) The acquisition of any shares of an issuing public corporation does not constitute a
             54      control share acquisition if the acquisition is consummated in any of the following circumstances:
             55          (a) before May 29, 1987;
             56          (b) pursuant to a contract existing before May 29, 1987;
             57          (c) pursuant to the laws of descent and distribution;
             58          (d) pursuant to the satisfaction of a pledge or other security interest created in good faith


             59      and not for the purpose of circumventing this chapter;
             60          (e) pursuant to a direct issue by or transfer from the issuing public corporation of its own
             61      shares, except that shares issued or transferred upon the conversion of a convertible security or
             62      upon exercising an option, warrant, or other right to purchase shares constitutes a control share
             63      acquisition unless the convertible security, option, warrant, or other right was acquired directly
             64      from the issuing public corporation by the acquiring person; or
             65          (f) pursuant to a merger or plan of share exchange effected in compliance with Title 16,
             66      Chapter 10a, Part 11, Merger and Share Exchange, or Title 16, Chapter 10a, Part 12, Sale of
             67      Property, if the issuing public corporation is a party to the agreement of merger or plan of share
             68      exchange.
             69          (5) (a) The acquisition of shares of an issuing public corporation in good faith and not for
             70      the purpose of circumventing this chapter does not constitute a control share acquisition if the
             71      acquisition of shares is by or from:
             72          (i) any person whose voting rights had previously been authorized by shareholders in
             73      compliance with this chapter; or
             74          (ii) any person whose previous acquisition of shares of an issuing public corporation would
             75      have constituted a control share acquisition were it not for Subsection (4).
             76          (b) Subsection (5)(a) does not apply if the acquisition entitles any person (directly or
             77      indirectly, alone or as part of a group) to exercise or direct the exercise of voting power of the
             78      corporation in the election of directors in excess of the range of the voting power otherwise
             79      authorized.
             80          Section 3. Section 61-6-5 is amended to read:
             81           61-6-5. "Issuing public corporation" defined.
             82          (1) As used in this chapter, "issuing public corporation" means a corporation organized
             83      under the laws of this state other than a depository institution that has:
             84          (a) 100 or more shareholders;
             85          (b) its principal place of business, its principal office, or substantial assets within the state;
             86      and
             87          (c) (i) more than 10% of its shareholders resident in the state;
             88          (ii) more than 10% of its shares owned by Utah residents; or
             89          (iii) 10,000 shareholders resident in the state.


             90          (2) The residence of a shareholder is presumed to be the address appearing in the records
             91      of the corporation.
             92          (3) Shares held by banks or other depository institutions (except as trustee or guardian),
             93      brokers, or nominees shall be disregarded for purposes of calculating the percentages or numbers
             94      described in this section.
             95          (4) As used in this chapter, "depository institution" means a depository institution or a
             96      depository holding company subject to the jurisdiction of the Utah Department of Financial
             97      Institutions.




Legislative Review Note
    as of 2-4-00 9:13 AM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


[Bill Documents][Bills Directory]