§ 3-701
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/md/corporations-and-associations/3-701·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
§3–701.
(a)In this subtitle the following words have the meanings indicated.
(b)“Acquiring person” means a person who makes or proposes to make a control share acquisition.
(c)“Associate”, when used to indicate a relationship with any person, means:
(1)An “associate” as defined in § 3–601(c) of this title; or
(2)A person that:
(i)Directly or indirectly controls, or is controlled by, or is under common control with, the person specified; or
(ii)Is acting or intends to act jointly or in concert with the person specified.
(1)“Control share acquisition” means the acquisition, directly or indirectly, by any person, of ownership of, or the power to direct the exercise of voting power with respect to, issued and outstanding control shares.
(2)“Control share acquisition” does not include the acquisition of shares:
(i)Before November 4, 1988;
(ii)Under a contract made before November 4, 1988;
(iii)Under the laws of descent and distribution;
(iv)Under the satisfaction of a pledge or other security interest created in good faith and not for the purpose of circumventing this subtitle;
(v)Under a merger, consolidation, or share exchange effected under Subtitle 1 of this title if the corporation is a party to the merger, consolidation, or share exchange;
(vi)Within one–tenth or more but less than one–fifth of all voting power of outstanding shares of stock of the corporation before June 1, 2000;
(vii)At a time when the corporation is not subject to this subtitle; or
(viii)In accordance with a contract entered into at a time when the corporation is not subject to this subtitle.
(3)Unless the acquisition entitles any person, directly or indirectly, to exercise or direct the exercise of voting power in the election of directors in excess of the range of voting power previously authorized or attained under an acquisition that is exempt under paragraph
(2)of this subsection, “control share acquisition” does not include the acquisition of shares of a corporation in good faith and not for the purpose of circumventing this subtitle by or from:
(i)Any person whose voting rights have previously been authorized by stockholders in compliance with this subtitle; or
(ii)Any person whose previous acquisition of shares of stock of the corporation would have constituted a control share acquisition but for paragraph
(2)of this subsection.
(1)“Control shares” means shares of stock that, except for this subtitle, would, if aggregated with all other shares of stock of the corporation (including shares the acquisition of which is excluded from “control share acquisition” in subsection (d)(2) of this section) owned by a person or in respect of which that person is entitled to exercise or direct the exercise of voting power, except solely by virtue of a revocable proxy, entitle that person, directly or indirectly, to exercise or direct the exercise of the voting power of shares of stock of the corporation in the election of directors within any of the following ranges of voting power:
(i)One–tenth or more, but less than one–third of all voting power;
(ii)One–third or more, but less than a majority of all voting power; or
(iii)A majority or more of all voting power.
(2)“Control shares” includes:
(i)Shares of stock of a corporation only to the extent that the acquiring person, following the acquisition of the shares, is entitled, directly or indirectly, to exercise or direct the exercise of voting power within any level of voting power set forth in this section for which approval has not been obtained previously under § 3–702 of this subtitle; and
(ii)Shares of stock acquired within any range of voting power described in paragraph
(1)of this subsection, even if the initial shares acquired within the applicable range of voting power are excluded from a control share acquisition.
(f)“Corporation” includes a real estate investment trust, as defined in Title 8 of this article.
(g)“Interested shares” means shares of a corporation in respect of which any of the following persons is entitled to exercise or direct the exercise of the voting power of shares of stock of the corporation in the election of directors:
(1)An acquiring person;
(2)An officer of the corporation; or
(3)An employee of the corporation who is also a director of the corporation.
(h)“Person” includes an associate of the person.