In this subtitle the following words have the meanings indicated. “Acquiring person” means a person who makes or proposes to make a control share acquisition. “Associate”, when used to indicate a relationship with any person, means: An “associate” as defined in § 3–601(c) of this title; or A person that: Directly or indirectly controls, or is controlled by, or is under common control with, the person specified; or Is acting or intends to act jointly or in concert with the person specified. “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. “Control share acquisition” does not include the acquisition of shares: Before November 4, 1988; Under a contract made before November 4, 1988; Under the laws of descent and distribution; Under the satisfaction of a pledge or other security interest created in good faith and not for the purpose of circumventing this subtitle; 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; 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; At a time when the corporation is not subject to this subtitle; or In accordance with a contract entered into at a time when the corporation is not subject to this subtitle. 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: Any person whose voting rights have previously been authorized by stockholders in compliance with this subtitle; or 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. “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: One–tenth or more, but less than one–third of all voting power; One–third or more, but less than a majority of all voting power; or A majority or more of all voting power. “Control shares” includes: 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 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. “Corporation” includes a real estate investment trust, as defined in Title 8 of this article. “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: An acquiring person; An officer of the corporation; or An employee of the corporation who is also a director of the corporation. “Person” includes an associate of the person.

Holders of control shares of the corporation acquired in a control share acquisition have no voting rights with respect to the control shares except to the extent approved by the stockholders at a meeting held under § 3–704 of this subtitle by the affirmative vote of two–thirds of all the votes entitled to be cast on the matter, excluding all interested shares. A charter provision permitted by § 2–104(b)(5) of this article may not apply to the proportion of votes required by paragraph (1) of this subsection. This subtitle does not apply to the voting rights of shares of stock if the acquisition of the shares specifically, generally, or generally by types, as to specifically identified or unidentified existing or future stockholders or their affiliates or associates, has been approved or exempted by a provision contained in the charter or bylaws and adopted at any time before the acquisition of control shares. This subtitle does not apply to: A close corporation as defined in § 4–101(b) of this article; A corporation having fewer than 100 beneficial owners of its stock; A corporation registered under the Investment Company Act of 1940 as an open end investment company; or A corporation registered under the Investment Company Act of 1940 as a closed end investment company unless its board of directors adopts a resolution to be subject to this subtitle on or after June 1, 2000. For the purposes of subsection (c)(2) of this section, all stockholders of a corporation that have executed an agreement to which the corporation is an executing party governing the purchase and sale of stock of the corporation or a voting trust agreement governing stock of the corporation shall be considered a single beneficial owner of the stock covered by the agreement. For the purposes of § 3-701 of this subtitle: Shares acquired within 90 days or shares acquired under a plan to make a control share acquisition are considered to have been acquired in the same acquisition; and A person may not be deemed to be entitled to exercise or direct the exercise of voting power with respect to shares held for the benefit of others if the person: Is acting in the ordinary course of business, in good faith and not for the purpose of circumventing the provisions of this section; and Is not entitled to exercise or to direct the exercise of the voting power of the shares unless the person first seeks to obtain the instruction of another person.

Any person who proposes to make or who has made a control share acquisition may deliver an acquiring person statement to the corporation at the corporation’s principal office. The acquiring person statement shall set forth all of the following: The identity of the acquiring person and each other member of any group of which the person is a part for purposes of determining control shares; A statement that the acquiring person statement is given under this subtitle; The number of shares of the corporation owned (directly or indirectly) by the acquiring person and each other member of any group; The applicable range of voting power as set forth in § 3–701(e) of this subtitle; and If the control share acquisition has not occurred: A description in reasonable detail of the terms of the proposed control share acquisition; and Representations of the acquiring person, together with a statement in reasonable detail of the facts on which they are based, that: The proposed control share acquisition, if consummated, will not be contrary to law; and The acquiring person has the financial capacity, through financing to be provided by the acquiring person and any additional specified sources of financing required under § 3–705 of this subtitle, to make the proposed control share acquisition.

Except as provided in § 3-705 of this subtitle, if the acquiring person requests, at the time of delivery of an acquiring person statement, and gives a written undertaking to pay the corporation’s expenses of a special meeting, except the expenses of opposing approval of the voting rights, within 10 days after the day on which the corporation receives both the request and undertaking, the directors of the corporation shall call a special meeting of stockholders of the corporation for the purpose of considering the voting rights to be accorded the shares acquired or to be acquired in the control share acquisition. The directors may require the acquiring person to give bond, with sufficient surety, to reasonably assure the corporation that this undertaking will be satisfied. Unless the acquiring person agrees in writing to another date, the special meeting of stockholders shall be held within 50 days after the day on which the corporation has received both the request and the undertaking. If the acquiring person makes a request in writing at the time of delivery of the acquiring person statement, the special meeting may not be held sooner than 30 days after the day on which the corporation receives the acquiring person statement. If no request is made under subsection (a) of this section, the issue of the voting rights to be accorded the shares acquired in the control share acquisition may, at the option of the corporation, be presented for consideration at any meeting of stockholders. If no request is made under subsection (a) of this section and the corporation proposes to present the issue of the voting rights to be accorded the shares acquired in a control share acquisition for consideration at any meeting of stockholders, the corporation shall provide the acquiring person with written notice of the proposal not less than 20 days before the date on which notice of the meeting is given.

A call of a special meeting of stockholders of the corporation is not required to be made under § 3-704(a) of this subtitle unless, at the time of delivery of an acquiring person statement under § 3-703 of this subtitle, the acquiring person has: Entered into a definitive financing agreement or agreements with one or more responsible financial institutions or other entities that have the necessary financial capacity, providing for any amount of financing of the control share acquisition not to be provided by the acquiring person; and Delivered a copy of the agreements to the corporation.

If a special meeting of stockholders is requested, notice of the special meeting shall be given as promptly as reasonably practicable by the corporation to all stockholders of record as of the record date set for the meeting, whether or not the stockholder is entitled to vote at the meeting. Notice of the special or annual meeting of stockholders at which the voting rights are to be considered shall include or be accompanied by the following: A copy of the acquiring person statement delivered to the corporation under § 3-703 of this subtitle; and A statement by the board of directors of the corporation setting forth the position or recommendation of the board, or stating that the board is taking no position or making no recommendation, with respect to the issue of voting rights to be accorded the control shares.

Unless the charter or bylaws provide otherwise, if an acquiring person statement has been delivered on or before the 10th day after the control share acquisition, the corporation may, at its option, redeem any or all control shares, except control shares for which voting rights have been previously approved under § 3-702 of this subtitle, at any time during a 60-day period commencing on the day of a meeting at which voting rights are considered under § 3-704 of this subtitle and are not approved. In addition to the redemption rights authorized under subsection (a) of this section, unless the charter or bylaws provide otherwise, if an acquiring person statement has not been delivered on or before the 10th day after the control share acquisition, the corporation may, at its option, redeem any or all control shares, except control shares for which voting rights have been previously approved under § 3-702 of this subtitle, at any time during a period commencing on the 11th day after the control share acquisition and ending 60 days after a statement has been delivered. Any redemption of control shares under this section shall be at the fair value of the shares. For purposes of this section, “fair value” shall be determined: As of the date of the last acquisition of control shares by the acquiring person in a control share acquisition or, if a meeting is held under § 3-704 of this subtitle, as of the date of the meeting; and Without regard to the absence of voting rights for the control shares.

Unless the charter or bylaws provide otherwise, before a control share acquisition has occurred, if voting rights for control shares are approved at a meeting held under § 3-704 of this subtitle and the acquiring person is entitled to exercise or direct the exercise of a majority or more of all voting power, all stockholders of the corporation (other than the acquiring person) have the rights of objecting stockholders as provided in Subtitle 2 of this title. For purposes of applying the provisions of Subtitle 2 of this title to stockholders under this section, the corporation shall be deemed to be a successor in a merger and the date of the most recent approval of voting rights referred to in subsection (a) of this section shall be deemed to be the date of filing of articles of merger for record with the Department. The notice required by § 3-207 of this title shall also state that stockholders (other than the acquiring person) are entitled to the rights of objecting stockholders under Subtitle 2 of this title and shall include a copy of this section and Subtitle 2 of this title. For purposes of applying the provisions of Subtitle 2 of this title to this section: “Fair value” may not be less than the highest price per share paid by the acquiring person in the control share acquisition; and §§ 3-202(c) and 3-203(a)(1) and (2) of this title do not apply.

This subtitle shall only apply to a Maryland corporation.

This subtitle may be cited as the Maryland Control Share Acquisition Act.