13.1-728.1 - Definitions. - Virginia Statutes

§ 13.1-728.1. Definitions.

As used in this article:

"Acquiring person," with respect to any public corporation, means anyperson who has made or proposes to make a control share acquisition of sharesof such public corporation.

"Beneficial ownership" means the sole or shared power to dispose or directthe disposition of shares, or the sole or shared power to vote or direct thevoting of shares, or the sole or shared power to acquire shares, includingany such power which is not immediately exercisable, whether such power isdirect or indirect or through any contract, arrangement, understanding,relationship or otherwise. A person shall not be deemed to be a beneficialowner of shares tendered pursuant to a tender or exchange offer made by suchperson until the tendered shares are accepted for purchase or exchange. Aperson shall not be deemed to be a beneficial owner of shares as to whichsuch person may exercise voting power solely by virtue of a revocable proxyconferring the right to vote. A member of a national securities exchangeshall not be deemed to be a beneficial owner of shares held directly orindirectly by it on behalf of another person solely because such member isthe record holder of such securities and, pursuant to the rules of suchexchange, may direct the vote of such shares, without instructions, on otherthan contested matters or matters that may affect substantially the rights orprivileges of the holders of the shares to be voted but is otherwiseprecluded by the rules of such exchange from voting without instructions.

"Control share acquisition" means the direct or indirect acquisition, otherthan in an excepted acquisition, by any person of beneficial ownership ofshares of a public corporation that, except for this article, would havevoting rights and would, when added to all other shares of such publiccorporation which then have voting rights and are beneficially owned by suchperson, would cause such person to become entitled, immediately uponacquisition of such shares, to vote or direct the vote of, shares havingvoting power within any of the following ranges of the votes entitled to becast in an election of directors: (i) one-fifth or more but less thanone-third of such votes; (ii) one-third or more but less than a majority ofsuch votes; or (iii) a majority or more of such votes. If voting rights aregranted pursuant to this article in respect of any such range to shares soacquired by any person, any acquisition by such person of additional sharesshall not, for purposes of the preceding sentence, constitute a control shareacquisition unless, as a result of such acquisition, the voting power of theshares beneficially owned by such person would be in excess of such range inrespect of which voting rights had previously been granted. If this articleapplies to acquisitions of shares of a public corporation at the time of acontrol share acquisition of any shares of such corporation, then sharesacquired by the same person within 90 days before or after such control shareacquisition and shares acquired by the same person pursuant to a plan to makea control share acquisition are deemed to have been acquired in the samecontrol share acquisition for the purposes of this article, regardless of theapplicability of this article at the time of any other acquisitions of sharesduring such periods or pursuant to such a plan.

"Excepted acquisition" means the acquisition of shares of a publiccorporation in any of the following circumstances:

1. Before January 26, 1988;

2. Pursuant to a binding contract in effect before January 26, 1988;

3. Pursuant to the laws of wills and decedents' estates;

4. Pursuant to the satisfaction of a pledge or other security interestcreated in good faith and not for the purpose of circumventing this article;

5. Pursuant to a merger or plan of share exchange effected in compliance withArticle 12 (§ 13.1-715.1 et seq.) of this chapter if the public corporationis a party to the agreement of merger or plan of share exchange;

6. Pursuant to a tender or exchange offer that is made pursuant to anagreement to which the public corporation is a party;

7. Directly from the public corporation, or from any of its wholly ownedsubsidiaries, or from any corporation having beneficial ownership of sharesof the public corporation having at least a majority, before suchtransaction, of the votes entitled to be cast in the election of directors ofsuch public corporation; or

8. In good faith and not for the purpose of circumventing this chapter by orfrom any person (a "transferor") whose voting rights had previously beenauthorized by shareholders in compliance with this article, or whose previousacquisition of beneficial ownership of shares would have constituted acontrol share acquisition but for any of subdivisions 1 through 7 in thisdefinition; however, any acquisition described in this subdivision 8 shallconstitute a control share acquisition if as a result thereof any personacquires beneficial ownership of shares of such issuing public corporationhaving voting power in the election of directors in excess of the range ofvotes within which the transferor was authorized by this article to exercisevoting power immediately before such acquisition.

"Interested shares" means the shares of a public corporation the voting ofwhich in an election of directors may be exercised or directed by any of thefollowing persons: (i) an acquiring person with respect to a control shareacquisition; (ii) any officer of such public corporation; or (iii) anyemployee of such public corporation who is also a director of the corporation.

"Person" includes an associate of any person. For this purpose,"associate" shall mean (i) any other person who directly or indirectlycontrols, or is controlled by or under common control with, any such personor who is acting or intends to act jointly or in concert with any such personin connection with the acquisition of or exercise of beneficial ownershipover shares; (ii) any corporation or organization of which any such person isan officer, director, manager or partner or as to which any such personperforms a similar function; (iii) any other person having direct or indirectbeneficial ownership of 10 percent or more of any class of equity securitiesof any such person; (iv) any trust or estate in which any such person has abeneficial interest or as to which any such person serves as trustee or in asimilar fiduciary capacity; and (v) any relative or spouse of any suchperson, or any relative of such spouse, any one of whom has the sameresidence as any such person. For this purpose, "control" shall mean thepossession, direct or indirect, of the power to direct or to cause thedirection of the management or policies of a person, whether through theownership of voting securities, by contract, arrangement or understanding, orotherwise.

The "votes" entitled to be cast by any share shall, if any voting group isentitled to vote for less than the total number of directors to be elected atany election, be determined by multiplying the number of votes entitled to becast by the holder of such share by the number of directors for whom suchholder is entitled to vote; however, beneficial ownership of a majority ofthe shares comprising any such voting group shall be deemed to entitle suchbeneficial owner to cast all the votes of the shares in such voting group.

(1989, c. 14; 1990, c. 252; 2005, c. 765.)