Requirements for Business Combination

Checkout our iOS App for a better way to browser and research.

If a business combination is subject to regulation under this part and the requisite approval for the business combination or acquisition of shares has not been obtained from the resident domestic corporation board of directors under §48-103-205 prior to such interested shareholder's share acquisition date, a resident domestic corporation shall only engage in a business combination, or vote, consent or otherwise act to authorize a subsidiary of the resident domestic corporation to engage in any business combination, with, with respect to, proposed by or on behalf of, or pursuant to any agreement, arrangement or understanding (whether or not in writing) with, any interested shareholder of the resident domestic corporation or any affiliate or associate of such interested shareholder after the expiration of a period of five (5) years commencing as of such interested shareholder's share acquisition date, if such business combination satisfies all applicable requirements contained in the resident domestic corporation's charter or bylaws, the applicable provisions of the Tennessee Business Corporation Act, compiled in chapters 11-27 of this title, or other Tennessee statutes and is additionally either:

  1. A business combination which has been approved by the affirmative vote of the holders of two thirds (2/3) of the voting stock not beneficially owned by such interested shareholder and the affiliates and associates of such interested shareholder at a meeting called for such purpose no earlier than five (5) years after such interested shareholder's share acquisition date; or
  2. A business combination, with respect to which the consummation date is no earlier than five (5) years after the interested shareholder's share acquisition date; provided, that such business combination meets all of the following conditions:
    1. The aggregate amount of the cash and the market value as of the consummation date of consideration other than cash to be received per share by holders of each outstanding class or series of shares of such resident domestic corporation in such business combination is at least equal to the higher of the following:
      1. The highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by such interested shareholder for any shares of the same class or series acquired by it:
  1. Within the five-year period immediately prior to the announcement date with respect to such business combination; or
  2. Within the five-year period immediately prior to the transaction in which such interested shareholder became an interested shareholder; whichever is higher; plus, in either case, interest compounded annually from the earliest date on which such highest per share acquisition price was paid through the consummation date at the rate for one-year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividends paid and the market value of any dividends paid other than in cash per share since such earliest date, up to the amount of such interest;

The highest preferential amount per share to which the holders of shares of such class or series of shares are entitled in the event of any liquidation, dissolution or winding up of such resident domestic corporation, plus the aggregate amount of any dividends declared or due as to which such holders are entitled prior to payment of dividends on some other class or series of shares (unless the aggregate amount of such dividends is included in such preferential amount); or

The market value per share of each class or series of shares on the announcement date with respect to such business combination or on such interested shareholder's share acquisition date, whichever is higher; plus interest compounded annually from such date through the consummation date at the rate for one-year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividends paid and the market value of any dividends paid other than in cash per share on each class or series of shares since such date, up to the amount of such interest;

The consideration to be received by holders of a particular class or series of outstanding shares of such resident domestic corporation in such business combination is in cash or in the same form as the interested shareholder used to acquire the largest number of shares of such class or series of shares previously acquired by the interested shareholder and such consideration shall be distributed as soon as practical;

The holders of all outstanding shares of each class or series of shares of such resident domestic corporation not beneficially owned by such interested shareholder immediately prior to the consummation of such business combination (except those who may perfect their rights of dissent) are entitled to receive in such business combination cash or other consideration for such shares in compliance with subdivisions (2)(A) and (B); and

After such interested shareholder's share acquisition date and prior to the consummation date with respect to such business combination, such interested shareholder has not become the beneficial owner of any additional shares of such resident domestic corporation except:

As part of the transaction which resulted in such interested shareholder becoming an interested shareholder;

By virtue of proportionate share splits, share dividends or other distributions of shares in respect of shares not constituting a business combination under §48-103-203(5)(F); or

Through purchase by such interested shareholder at any price which, if such price had been paid in an otherwise permissible business combination, would have satisfied the requirements of subdivisions (2)(A)-(C).


Download our app to see the most-to-date content.