Rhode Island General Laws 7-5.2-5. Exemptions
The provisions of this chapter do not apply:
(1) To any business combination of a resident domestic corporation that does not have a class of voting stock registered with the Securities and Exchange Commission pursuant to § 12 of the Securities Exchange Act of 1934, 15 U.S.C. § 78l, unless the articles of incorporation provide otherwise;
(2) To any business combination of a resident domestic corporation whose articles of incorporation have been amended to provide that the resident domestic corporation is subject to the provisions of this chapter, that did not have a class of voting stock registered with the Securities and Exchange Commission pursuant to § 12 of the Securities Exchange Act of 1934, 15 U.S.C. § 78l, on the effective date of the amendment, and that is a business combination with an interested shareholder whose stock acquisition date is prior to the effective date of the amendment;
(3) To any business combination of a resident domestic corporation:
(i) The original articles of incorporation of which contain a provision expressly electing not to be governed by this chapter;
(ii) That adopts an amendment to the resident domestic corporation’s bylaws prior to March 31, 1991, expressly electing not to be governed by this chapter; or
(iii) That adopts an amendment to the resident domestic corporation’s articles of incorporation, approved by the affirmative vote of the holders, other than interested shareholders and their affiliates and associates, of two-thirds (?) of the outstanding voting stock of the resident domestic corporation, excluding the voting stock of interested shareholders and their affiliates and associates, expressly electing not to be governed by this chapter, provided that the amendment to the articles of incorporation is not effective until twelve (12) months after the vote of the resident domestic corporation’s shareholders and does not apply to any business combination of the resident domestic corporation with an interested shareholder whose stock acquisition date is on or prior to the effective date of the amendment; or
(4) To any business combination of a resident domestic corporation with an interested shareholder of the resident domestic corporation that became an interested shareholder inadvertently, if the interested shareholder:
(i) As soon as practicable, divests itself of a sufficient amount of the voting stock of the resident domestic corporation that it no longer is the beneficial owner, directly or indirectly, of ten percent (10%) or more of the outstanding voting stock of the resident domestic corporation; and
(ii) Would not at any time within the five-year (5) period preceding the announcement date with respect to the business combination have been an interested shareholder but for the inadvertent acquisition.
History of Section.
P.L. 1990, ch. 138, § 1; P.L. 1991, ch. 422, § 1; P.L. 2018, ch. 346, § 4.
Terms Used In Rhode Island General Laws 7-5.2-5
- 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.
- 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
- 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, 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
- 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.
- Exchange Act: means the Act of Congress known as the Securities Exchange Act of 1934, Rhode Island General Laws 7-5.2-3
- 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
- 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
- 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