48-103-503 - Corporation's purchase of own shares at price above market value. - Tennessee Statutes

48-103-503. Corporation's purchase of own shares at price above market value.

(a)  It is unlawful for any corporation subject to this part, including any subsidiary of such corporation, to purchase, directly or indirectly, any of its shares at a price above the market value of such shares from any person who holds more than three percent (3%) of the class of the securities to be purchased if such person has held such shares for less than two (2) years, unless such purchase has been approved by the affirmative vote of a majority of the outstanding shares of each class of voting stock issued by such corporation or the corporation makes an offer, of at least equal value per share, to all holders of shares of such class.

(b)  For the purposes of this section, the market value of such shares shall be the average of the highest and lowest closing market price for such shares during the thirty (30) trading days preceding the purchase and sale of the shares subject to this section; provided, that if the seller of such shares has commenced a tender offer or has announced an intention to seek control of the corporation, such market price shall be based upon the average of the highest and lowest closing price for such shares during the thirty (30) trading days preceding the commencement of such tender offer or the making of such announcement.

[Acts 1988, ch. 500, § 28; T.C.A., § 48-35-503.]