Rhode Island General Laws
Chapter 7-5.2 - Business Combination Act
Section 7-5.2-4. - Approval of acquisitions.

§ 7-5.2-4. Approval of acquisitions.
(a) Notwithstanding anything contained in this chapter to the contrary, except the provisions of § 7-5.2-5, no resident domestic corporation shall engage in any business combination with any interested shareholder of the resident domestic corporation for a period of five (5) years following the interested shareholder’s stock acquisition date unless the business combination or the purchase of stock made by the interested shareholder on the interested shareholder’s stock acquisition date is approved by the board of directors of the resident domestic corporation prior to the interested shareholder’s stock acquisition date.
(b) Notwithstanding anything contained in this chapter to the contrary, except the provisions of subsection (a) and § 7-5.2-5, no resident domestic corporation shall engage at any time in any business combination with any interested shareholder of the resident domestic corporation other than a business combination specified in any one of subsections (b)(1), (b)(2), or (b)(3):
(1) A business combination approved by the board of directors of the resident domestic corporation prior to the interested shareholder’s stock acquisition date, or where the purchase of stock made by the interested shareholder on the interested shareholder’s stock acquisition date had been approved by the board of directors of the resident domestic corporation prior to the interested shareholder’s stock acquisition date;
(2) A business combination approved by the affirmative vote of the holders of two-thirds (⅔) of the outstanding voting stock not beneficially owned by the interested shareholder or any affiliate or associate of the interested shareholder at a meeting called for that purpose no earlier than five (5) years after the interested shareholder’s stock acquisition date;
(3) A business combination that meets all of the following conditions:
(i) 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 outstanding shares of common stock of the resident domestic corporation in the business combination is at least equal to the higher of the following:
(A) The highest per-share price paid by the interested shareholder at a time when the interested shareholder was the beneficial owner, directly or indirectly, of five percent (5%) or more of the outstanding voting stock of the resident domestic corporation, for any shares of common stock of the same class or series acquired by it within the five-year (5) period immediately prior to the announcement date concerning the business combination, or within the five-year (5) period immediately prior to, or in, the transaction in which the interested shareholder became an interested shareholder, whichever is higher; plus, in either case, interest compounded annually from the earliest date on which the 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 of common stock since the earliest date, up to the amount of the interest; and
(B) The market value per share of common stock on the announcement date with respect to the business combination or on the interested shareholder’s stock acquisition date, whichever is higher, plus interest compounded annually from the 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 of common stock since the date, up to the amount of the interest;
(ii) 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 outstanding shares of any class or series of stock, other than common stock, of the resident domestic corporation is at least equal to the highest of the following, whether or not the interested shareholder has previously acquired any shares of the class or series of stock:
(A) The highest per-share price paid by the interested shareholder at a time when he or she was the beneficial owner, directly or indirectly, of five percent (5%) or more of the outstanding voting stock of the resident domestic corporation, for any shares of the class or series of stock acquired by it within the five-year (5) period immediately prior to the announcement date with respect to the business combination, or within the five-year (5) period immediately prior to, or in, the transaction in which the interested shareholder became an interested shareholder, whichever is higher; plus, in either case, interest compounded annually from the earliest date on which the 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 dividend paid, and the market value of any dividends paid other than in cash, per share of the class or series of stock since the earliest date, up to the amount of the interest;
(B) The highest preferential amount per share to which the holders of shares of the class or series of stock are entitled in the event of any voluntary liquidation, dissolution, or winding up of the resident domestic corporation, plus the aggregate amount of any dividends declared or due to which the holders are entitled prior to payment of dividends on some other class or series of stock (unless the aggregate amount of the dividends is included in the preferential amount); and
(C) The market value per share of the class or series of stock on the announcement date with respect to the business combination or on the interested shareholder’s stock acquisition date, whichever is higher; plus interest compounded annually from the 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 of the class or series of stock since the date, up to the amount of the interest;
(iii) The consideration to be received by holders of a particular class or series of outstanding stock, including common stock, of the resident domestic corporation in the business combination is in cash or in the same form as the interested shareholder has used to acquire the largest number of shares of the class or series of stock previously acquired by it, and the consideration shall be distributed promptly;
(iv) The holders of all outstanding shares of stock of the resident domestic corporation not beneficially owned by the interested shareholder immediately prior to the consummation of the business combination are entitled to receive in the business combination cash or other consideration for the shares in compliance with subsections (b)(3)(i) through (b)(3)(iii);
(v) After the interested shareholder’s stock acquisition date and prior to the consummation date of the business combination, the interested shareholder has not become the beneficial owner of any additional shares of voting stock of the resident domestic corporation except:
(A) As part of the transaction that resulted in the interested shareholder becoming an interested shareholder;
(B) By virtue of proportionate stock splits, stock dividends, or other distributions of stock in respect of stock not constituting a business combination under § 7-5.2-3(5)(v);
(C) Through a business combination meeting all of the conditions of this section; or
(D) Through purchase by the interested shareholder at any price which, if the price had been paid in an otherwise permissible business combination the announcement date and consummation date of which were the date of the purchase, would have satisfied the requirements of subsections (b)(3)(i) through (b)(3)(iii) of this section.
History of Section.P.L. 1990, ch. 138, § 1; P.L. 1991, ch. 422, § 1.

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