North Carolina § 55-9A-01 - Short title and definitions.

§ 55-9A-01. Short title and definitions.

The provisions of this Article shall be known and may be cited as The North Carolina Control Share Acquisition Act. In this Article: "Beneficial ownership" of shares means the sole or shared ownership of any shares or the sole or shared power to vote any shares or to direct the exercise of voting power of any shares, whether such ownership or power is direct or indirect or through any contract, arrangement, understanding, relationship or otherwise, and includes shares beneficially owned by any person acting in concert with such beneficial owner pursuant to any contract, arrangement, understanding, relationship or otherwise. Notwithstanding the foregoing, beneficial ownership does not include shares acquired in the ordinary course of business for the benefit of others in good faith and not for the purpose of circumventing this Article, unless the acquiror of such shares may exercise or direct the exercise of voting of such shares without instruction from others. "Control shares" means shares of a covered corporation that when added to all other shares of the corporation beneficially owned by a person would entitle (except for this Article) that person to voting power in the election of directors that is equal to or greater than any of the following levels of voting power: One-fifth of all voting power. One-third of all voting power. A majority of all voting power. "Control share acquisition" means the acquisition by any person of beneficial ownership of control shares, except that the acquisition of beneficial ownership of any shares of a covered corporation does not constitute a control share acquisition if the acquisition is consummated in any of the following circumstances: Before April 30, 1987. Pursuant to a contract existing before April 30, 1987, with either: The covered corporation; or A seller of such shares who owned such shares before April 30, 1987. Pursuant to the laws of descent and distribution. Pursuant to the satisfaction of a pledge or other security interest created in good faith and not for the purpose of circumventing this Article. Pursuant to a transaction effected in compliance with applicable law, but only if the transaction is pursuant to an agreement to which the covered corporation is a party. Pursuant to the sale of such shares by the covered corporation or its parent or subsidiary corporation. Pursuant to a written agreement to which the covered corporation is a party that permits the purchasers of shares from the covered corporation or its parent or subsidiary corporation also to purchase in any manner within 90 days before or after the purchase from the covered corporation or its parent or subsidiary up to the same aggregate number of shares as were sold by the covered corporation or its parent or subsidiary corporation. By an employee benefit plan established by the covered corporation. Before the corporation became a covered corporation. "Interested shares" means the shares of a covered corporation beneficially owned by any of the following persons: Any person who has acquired or proposes to acquire control shares in a control share acquisition. Any officer of the covered corporation. Any employee of the covered corporation who is also a director of the corporation. "Covered corporation" means a corporation that: Is incorporated under the laws of North Carolina and has substantial assets within North Carolina; Has a class of shares registered under Section 12 of the Securities Exchange Act of 1934; Has its principal place of business or principal office within North Carolina; and Has either: More than ten percent (10%) of its shareholders resident in North Carolina; or More than ten percent (10%) of its shares owned by North Carolina residents. The residence of a shareholder is presumed to be the address appearing in the records of the corporation. For purposes of calculating the percentages or numbers described in subsection (b)(5) of this section, any shares held in trust or by a nominee shall be deemed to be held by the beneficiaries of such trust or by the beneficiaries of such shares held by such nominee. For purposes of this definition, shares acquired within any consecutive 90-day period or shares acquired pursuant to a plan to make a control share acquisition are considered to have been acquired in the same acquisition. History (1987, c. 182, s. 1; 1989, c. 200, s. 1; c. 265, s. 1; 1989 (Reg. Sess., 1990), c. 1024, s. 12.16; 2001-201, s. 16.) Editor's Note. - Article 9A, as set out in Session Laws 1989, c. 265, is essentially former Article 7A of Chapter 55 , as enacted by Session Laws 1987, c. 182, s. 1, and c. 773, s. 12, and amended by Session Laws 1989, c. 200. This article is not in the Revised Model Business Corporation Act, and there are no Official Comments or North Carolina Comments thereto. The present Article 9A, as set out in Session Laws 1989, c. 265, differs from former Article 7A in three main respects. First, the term "issuing public corporation" was changed to "covered corporation." Second, former G.S. 55-98, dealing with the effect of former Article 7A on former Article 7, was deleted. Third, § 55-9A-08 was added. In addition, minor amendments to conform new Article 9A to the rest of new Chapter 55 were made throughout the Article. Legal Periodicals. - For note, "The Constitutionality of the North Carolina Control Share Acquisition Act," see 66 N.C.L. Rev. 1123 (1988). For article, "Tender Offer Regulation: The Need for Reform," see 23 Wake Forest L. Rev. 1 (1988). For article, "Multiservice Securities Firms: Coping with Conflicts in a Tender Offer Context," see 23 Wake Forest L. Rev. 41 (1988). For article, "State Anti-Takeover Legislation: The Second and Third Generations," see 23 Wake Forest L. Rev. 77 (1988). For article, "Government Regulation of Business: Golden Parachutes Revisited," see 23 Wake Forest L. Rev. 121 (1988). For comment, "The Duty to Disclose v. The Duty Not to Mislead During Merger Negotiations," see 23 Wake Forest L. Rev. 143 (1988). For comment, "Fiduciary Duties of Directors: How Far Do They Go?," see 23 Wake Forest L. Rev. 163 (1988). For article, "Should Corporate Statutes Providing Special Protection for Directors Be Limited to Publicly Traded Corporations?," see 24 Wake Forest L. Rev. 79 (1989). For article, "The Creation of North Carolina's Limited Liability Corporation Act," see 32 Wake Forest L. Rev. 179 (1997). For article, "Silencing the Shareholder's Voice," see 80 N.C.L. Rev. 1897 (2002). For article, "Is the Corporate Director's Duty of Care a 'Fiduciary' Duty? Does it Matter?," see 48 Wake Forest L. Rev. 1027 (2013).