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Statutes Text

Article - Corporations and Associations




§3–702.

    (a)    (1)    Holders of control shares of the corporation acquired in a control share acquisition have no voting rights with respect to the control shares except to the extent approved by the stockholders at a meeting held under § 3–704 of this subtitle by the affirmative vote of two–thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

        (2)    A charter provision permitted by § 2–104(b)(5) of this article may not apply to the proportion of votes required by paragraph (1) of this subsection.

    (b)    This subtitle does not apply to the voting rights of shares of stock if the acquisition of the shares specifically, generally, or generally by types, as to specifically identified or unidentified existing or future stockholders or their affiliates or associates, has been approved or exempted by a provision contained in the charter or bylaws and adopted at any time before the acquisition of the shares.

    (c)    This subtitle does not apply to:

        (1)    A close corporation as defined in § 4-101(b) of this article;

        (2)    A corporation having fewer than 100 beneficial owners of its stock;

        (3)    A corporation registered under the Investment Company Act of 1940 as an open end investment company; or

        (4)    A corporation registered under the Investment Company Act of 1940 as a closed end investment company unless its board of directors adopts a resolution to be subject to this subtitle on or after June 1, 2000, provided that the resolution shall not be effective with respect to any person who has become a holder of control shares before the time that the resolution is adopted.

    (d)    For the purposes of subsection (c)(2) of this section, all stockholders of a corporation that have executed an agreement to which the corporation is an executing party governing the purchase and sale of stock of the corporation or a voting trust agreement governing stock of the corporation shall be considered a single beneficial owner of the stock covered by the agreement.

    (e)    For the purposes of § 3-701 of this subtitle:

        (1)    Shares acquired within 90 days or shares acquired under a plan to make a control share acquisition are considered to have been acquired in the same acquisition; and

        (2)    A person may not be deemed to be entitled to exercise or direct the exercise of voting power with respect to shares held for the benefit of others if the person:

            (i)    Is acting in the ordinary course of business, in good faith and not for the purpose of circumventing the provisions of this section; and

            (ii)    Is not entitled to exercise or to direct the exercise of the voting power of the shares unless the person first seeks to obtain the instruction of another person.



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