SDCL § 47-33-1 Citation of chapter.
47-33-1. Citation of chapter.
This chapter shall be known and may be cited as the South Dakota Domestic Public Corporation Takeover Act.
SL 1990, ch 369, § 101.
SOUTH DAKOTA DOMESTIC PUBLIC CORPORATION TAKEOVER ACT
SDCL tit. 47, ch. 47-33
in effectSDCL § 47-33-2 Declaration of public policy.
47-33-2. Declaration of public policy.
The Legislature hereby finds and declares the following to be the public policy of this state:
(1) This state has traditionally regulated the affairs of corporations organized in this state, including the regulation of mergers and other business combinations and the rights of shareholders. The United State Supreme Court has recently reaffirmed the power of states to regulate these affairs.
(2) Domestic public corporations encompass, represent and affect, through their ongoing business operations, a variety of constituencies, including South Dakota shareholders, employees, customers, creditors, suppliers of goods and services, and local communities and their economies whose welfare is vital to the state's interests.
(3) In order to promote such welfare, the regulation of the internal affairs of domestic public corporations as reflected in the laws of this state governing business corporations should allow for the stable, long-term growth of domestic public corporations.
(4) Takeovers of publicly held corporations frequently occur through acquisition techniques which in effect coerce shareholders to participate in the transaction.
(5) Takeovers of publicly held corporations are also frequently financed largely through debt to be repaid in the short term through changes in the operations of the target corporation, by the sale of substantial assets of the target corporation, and other means. In other states, such takeovers have impaired local employment conditions and disrupted local commercial activity. These takeovers involve a substantial risk of unfair business dealing, may prevent shareholders from realizing the full value of their holdings through forced mergers and other coercive devices, and may undermine the state's interest in promoting stable relationships involving the corporations that it charters. The threat of these takeovers also deprives shareholders of value by forcing the adoption of short-term business strategies as well as defensive tactics which may not be in the public interest.
(6) This chapter is not intended to prevent the use of any other lawful measure to challenge or defend against attempts to acquire control of a domestic public corporation, including, without limiting the generality of the foregoing, rights and options described in § 47-33-5.
SL 1990, ch 369, § 102.
SDCL § 47-33-3 Definition of terms.
47-33-3. Definition of terms.
(1) Terms used in this chapter mean:
(a) "Acquiring person," a person that makes or proposes to make a control share acquisition. If two or more persons act as a partnership, limited partnership, syndicate or other group pursuant to any written or unwritten agreement, arrangement, relationship, understanding or otherwise, for the purposes of acquiring, owning or voting shares of a domestic public corporation, all members of the partnership, syndicate or other group constitute a "person." "Acquiring person" does not include:
(i) A licensed broker/dealer or licensed underwriter who
(A) Purchases shares of a domestic public corporation solely for the purposes of resale to the public; and
(B) Is not acting in concert with an acquiring person; or
(ii) A person who becomes entitled to exercise or direct the exercise of a new range of voting power within any of the ranges specified in subdivision 47-33-9(4) solely as a result of a repurchase of shares by, or recapitalization of, the domestic public corporation or similar action unless:
(A) The repurchase, recapitalization or similar action was proposed by or on behalf of, or pursuant to any written or unwritten agreement, arrangement, relationship, understanding, or otherwise with, the person or any affiliate or associate of the person; or
(B) The person thereafter acquires beneficial ownership, directly or indirectly, of outstanding voting shares of the domestic public corporation and, immediately after the acquisition, is entitled to exercise or direct the exercise of the same or a higher range of voting power under subdivision 47-33-9(4) as the person became entitled to exercise as a result of the repurchase, recapitalization, or similar action;
(b) "Affiliate," a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, a specified person;
(c) "Announcement date," if used in reference to any business combination, means the date of the first public announcement of the final, definitive proposal for the business combination;
(d) "Articles," the original or restated articles of incorporation and all amendments thereto;
(e) "Associate," if used to indicate a relationship with any person, means any of the following:
(i) Any corporation or organization of which the person is an officer or partner or is, directly or indirectly, the beneficial owner of ten percent or more of any class or series of its equity securities;
(ii) Any trust or other estate in which the person has a substantial beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity;
(iii) Any relative or spouse of the person, or any relative of the spouse residing in the home of the person;
(f) "Beneficial owner," if used with respect to any equity security, means a person:
(i) That, individually or with or through any of its affiliates or associates, beneficially owns an equity security, directly or indirectly;
(ii) That, individually with or through any of its affiliates or associates has:
(A) The right to acquire an equity security, whether that right is exercisable immediately or only after the passage of time, pursuant to any agreement, arrangement, relationship or understanding, whether written or unwritten, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise. However, a person may not be deemed the beneficial owner of shares tendered pursuant to a tender or exchange offer made by that person or any of that person's affiliates or associates until those tendered shares are accepted for purchase or exchange; or
(B) The right to vote an equity security pursuant to any agreement, arrangement, relationship or understanding, whether written or unwritten. However, a person may not be deemed the beneficial owner of any shares under this subparagraph if the agreement, arrangement, relationship or understanding to vote the shares (1) arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made in accordance with the applicable rules and regulations under the Exchange Act, and (2) is not then reportable on a Schedule 13D under the Exchange Act or any comparable or successor report; or
(iii) That has any agreement, arrangement, relationship or understanding, whether written or unwritten, for the purpose of acquiring, holding, voting (except voting under a revocable proxy or consent described in subparagraph (ii)(B) of this subsection), or disposing of an equity security with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, the equity security;
(g) "Board," the board of directors of a corporation;
(h) "Business combination," if used in reference to a domestic public corporation and any interested shareholder of the domestic public corporation, means any of the following:
(i) Any merger or consolidation of the domestic public corporation or any subsidiary of the domestic public corporation with:
(A) The interested shareholder; or
(B) Any other foreign or domestic corporation (whether or not itself an interested shareholder of the domestic public corporation) that is, or after the merger or consolidation would be, an affiliate or associate of the interested shareholder, but excluding (1) the merger of a wholly-owned subsidiary of the domestic public corporation into the domestic public corporation, (2) the merger of two or more wholly-owned subsidiaries of the domestic public corporation, or (3) the merger of a domestic or foreign corporation, other than an interested shareholder or an affiliate or associate of an interested shareholder, with a wholly-owned subsidiary of the domestic public corporation pursuant to which the surviving corporation, immediately after the merger, becomes a wholly-owned subsidiary of the domestic public corporation;
(ii) Any exchange, pursuant to a plan of exchange under the laws of this state or a comparable statute of any other state or jurisdiction, of shares of the domestic public corporation or any subsidiary of the domestic public corporation for equity securities of either (i) the interested shareholder; or (ii) any other domestic or foreign corporation, whether or not itself an interested shareholder of the domestic public corporation, that is, or after the exchange would be, an affiliate or associate of the interested shareholder;
(iii) Any sale, lease, exchange, mortgage, pledge, transfer, or other disposition, in one transaction or a series of transactions, to or with the interested shareholder or any affiliate or associate of the interested shareholder, of assets of the domestic public corporation or any subsidiary of the domestic public corporation to which any of the following applies;
(A) Having an aggregate market value equal to ten percent or more of the aggregate market value of all the assets, determined on a consolidated basis, of the domestic public corporation;
(B) Having an aggregate market value equal to ten percent or more of the aggregate market value of all the outstanding shares of the domestic public corporation; or
(C) Representing ten percent or more of the earning power or net income, determined on a consolidated basis, of the domestic public corporation;
(iv) The issuance or transfer by the domestic public corporation or any subsidiary of the domestic public corporation, in one transaction or a series of transactions, of any shares of the domestic public corporation or any subsidiary of the domestic public corporation that have an aggregate market value equal to five percent or more of the aggregate market value of all the outstanding shares of the domestic public corporation to the interested shareholder or any affiliate or associate of the interested shareholder, except pursuant to the exercise of rights or options to purchase shares offered, or a dividend or distribution paid or made, pro rata to all shareholders of the domestic public corporation other than for the purpose, directly or indirectly, of facilitating or effecting a subsequent transaction that would have been a business combination if the dividend or distribution had not been made;
(v) The adoption of any plan or proposal for the liquidation or dissolution of the domestic public corporation, or any reincorporation of the domestic public corporation in another state or jurisdiction, proposed by or on behalf of, or pursuant to any written or unwritten agreement, arrangement, relationship, understanding or otherwise with, the interested shareholder or any affiliate or associate of the interested shareholder;
(vi) Any reclassification of securities, including any share dividend or split, reverse share split, or other distribution of shares in respect of shares, any recapitalization of the domestic public corporation, any merger or consolidation of the domestic public corporation with any subsidiary of the domestic public corporation, or any other transaction, whether or not with or into or otherwise involving the interested shareholder, proposed by, on behalf of, or pursuant to any written or unwritten agreement, arrangement, relationship, understanding or otherwise with, the interested shareholder or any affiliate or associate of the interested shareholder, that has the effect, directly or indirectly, of increasing the proportionate amount of the outstanding voting shares of any class or series, or securities that are exchangeable for or convertible into, or carry the right to acquire voting shares, of the domestic public corporation or any subsidiary of the domestic public corporation that is, directly or indirectly, owned by the interested shareholder or any affiliate or associate of the interested shareholder, except as a result of immaterial changes due to fractional share adjustments; or
(vii) Any receipt by the interested shareholder or any affiliate or associate of the interested shareholder of the benefit, directly or indirectly, except proportionately as a shareholder of the domestic public corporation, of any loans, advances, guarantees, pledges or other financial assistance, or any tax credits or other tax advantages provided by or through the domestic public corporation. However, the term "business combination" may not be deemed to include the receipt of any of the foregoing benefits by that domestic public corporation or any of that corporation's subsidiaries arising from transactions, such as intercompany loans or tax sharing arrangements, between that domestic public corporation and its subsidiaries in the ordinary course of business;
(i) "Common shares," any shares other than preferred shares;
(j) "Consummation date," with respect to any business combination, the date of consummation of the business combination or, in the case of a business combination as to which a shareholder vote is taken, the later of:
(i) The business day before the vote; or
(ii) Twenty days before the date of consummation of business combination;
(k) "Control," including the terms "controlling," "controlled by," and "under common control with," means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract, or otherwise. A person's beneficial ownership of ten percent or more of the voting power of a corporation's outstanding voting shares creates a presumption that the person has control of the corporation. Notwithstanding the foregoing, a person is not considered to have control of a corporation if the person holds voting shares, in good faith and not for the purpose of circumventing this chapter, as an agent, bank, broker, nominee, custodian or trustee for one or more beneficial owners who do not individually or as a group have control of the corporation;
(l) "Control share acquisition," an acquisition, directly or indirectly, by an acquiring person of beneficial ownership of shares of a domestic public corporation that, except for § 47-33-8, would, if added to all other shares of the domestic public corporation beneficially owned by the acquiring person, entitle the acquiring person, immediately after the acquisition, to exercise or direct the exercise of a new range of voting power within any of the ranges specified in subdivision 47-33-9(4) but does not include any of the following:
(i) An acquisition before, or pursuant to a contract entered into before, February 21, 1990;
(ii) An acquisition by a donee pursuant to an inter vivos gift not made to avoid this chapter or by any person who acquires the shares of a decedent from the representative of the decedent's estate other than as a creditor or purchaser; or
(iii) An acquisition pursuant to the satisfaction of a pledge or other security interest created in good faith and not for the purpose of circumventing this chapter;
(iv) An acquisition pursuant to a merger, consolidation or share exchange effected under §§ 47-1A-1101 to 47-1A-1108, inclusive, if the domestic public corporation is a party to the transaction;
(v) An acquisition for the benefit of others by a person acting in good faith and not made to avoid this chapter, to the extent that the person may not exercise or direct the exercise of the voting power or disposition of the shares except upon the instruction of others;
(vi) The acquisition of shares of a domestic public corporation, in good faith, and not for the purpose of circumventing this chapter, by or from any person whose voting rights had previously been authorized by shareholders in compliance with this chapter, or any person whose previous acquisition of shares of a domestic public corporation would have constituted a control share acquisition but for one or more of the exceptions stated in subparagraphs (i) through (v) of this definition, unless the acquisition entitles the acquiring person, directly or indirectly, alone or as part of a group, to exercise or direct the exercise of voting power of the domestic public corporation in the election of directors in excess of the range of voting power previously authorized by the shareholders pursuant to § 47-33-12.
All shares the beneficial ownership of which is acquired within a ninety- day period, and all shares the beneficial ownership of which is acquired pursuant to a plan to make a control share acquisition, shall be deemed to have been acquired in the same acquisition;
(m) "Corporation" and "domestic corporation," a corporation for profit incorporated under the laws of this state;
(n) "Domestic public corporation," a corporation organized under the laws of this state that is a publicly held corporation, has more than fifty shareholders, and which:
(i) Has either its principal place of business or its principal executive office located in this state, and owns or controls assets located in this state having a fair market value of at least one million dollars and has more than one hundred employees in this state; or
(ii) Has more than five percent of its shareholders resident in this state, has more than five percent of its shares owned by residents in this state, or has more than two hundred fifty shareholders resident in this state.
For the purpose of subparagraph (ii) of this subsection, the residence of each shareholder is the address of the shareholder which appears on the records of the domestic public corporation;
(o) "Equity security,":
(i) Any share or similar security, any certificate of interest, any participation in any profit sharing agreement, any voting trust certificate, or any certificate of deposit for an equity security; and
(ii) Any security convertible, with or without consideration, into an equity security, or any warrant, call or other option or privilege of buying an equity security without being bound to do so, or any other security carrying any right to acquire, subscribe to, or purchase an equity security;
(p) "Exchange Act," the Securities Exchange Act of 1934, (48 Stat. 881, 15 U.S.C. § 78a et seq.) as amended;
(q) "Interested shareholder," if used in reference to any domestic public corporation, any person, other than the domestic public corporation or any subsidiary of the domestic public corporation, that is either:
(i) The beneficial owner, directly or indirectly, of ten percent or more of the outstanding voting shares of the domestic public corporation; or
(ii) Is an affiliate or associate of the domestic public corporation and at any time within the four-year period immediately before the date in question was the beneficial owner, directly or indirectly, of ten percent or more of the then outstanding voting shares of the domestic public corporation;
For the purposes of determining whether a person is an interested shareholder, the number of voting shares of the domestic public corporation considered to be outstanding includes shares considered to be beneficially owned by the person through the application of subsection (f) of this section, but does not include any other unissued voting shares of the domestic public corporation which may be issuable pursuant to any agreement, arrangement, or understanding, or upon the exercise of rights, options, conversion rights, or otherwise;
(r) "Interested shares," the shares of a domestic public corporation owned by any of the following persons:
(1) The acquiring person or its affiliates or associates;
(2) Any officer of the domestic public corporation; or
(3) Any employee of the domestic public corporation who is also a director of the domestic public corporation;
(s) "Market value," if used in reference to shares or property of any domestic public corporation, the following:
(i) In the case of shares, the highest closing sale price of a share during the thirty-day period immediately preceding the date in question on the composite tape for New York Stock Exchange listed shares, or, if the shares are not quoted on the composite tape or not listed on the New York Stock Exchange, on the principal United States securities exchange registered under the Exchange Act on which the shares are listed, or, if the shares are not listed on any such exchange, the highest closing bid quotation with respect to a share during the thirty-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share as determined by the board of the domestic public corporation in good faith; and
(ii) In the case of property other than cash or shares, the fair market value of the property on the date in question as determined in good faith by the board of the domestic public corporation;
(t) "Person," an individual, corporation, limited liability company, partnership, unincorporated association, organization or other entity;
(u) "Preferred shares," any class or series of shares of a domestic public corporation that under the bylaws or articles of incorporation of the domestic public corporation:
(i) Is entitled to receive payment of dividends before any payment of dividends on some other class or series of shares; or
(ii) Is entitled in the event of any voluntary liquidation, dissolution or winding up of the corporation to receive payment or distribution of a preferential amount before any payments or distributions are received by some other class or series of shares;
(v) "Publicly held corporation," a corporation that has a class of equity securities registered pursuant to § 12 of the Exchange Act, or subject to § 15(d) of the Exchange Act;
(w) "Share," one of the units, however designated, into which the shareholders' proprietary interests in the corporation are divided;
(x) "Share acquisition date," with respect to any person and any domestic public corporation, the date that the person first becomes an interested shareholder of the domestic public corporation;
(y) "Shareholder," one who is a holder of record of shares in a corporation;
(z) "Subsidiary," of a specified corporation, any other corporation of which a majority of the outstanding voting shares entitled to be cast is owned, directly or indirectly, by the specified corporation;
(aa) "Voting shares," shares of a corporation entitled to vote generally in the election of directors;
(2) Terms in this chapter mean:
(a) "Board," the board of directors of a corporation;
(b) "Class," if used with reference to shares, means a category of shares that differs in designation or one or more rights or preferences from another category of shares of the corporation;
(c) "Director," a member of the board;
(d) "Good faith," honesty in fact in the conduct of the act or transaction concerned;
(e) "Intentionally," that the person referred to either has a purpose to do or fail to do the act or cause the result specified or believes that the act or failure to act, if successful, will cause that result. A person intentionally violates a statute if the person intentionally does the act or causes the result prohibited by the statute, or if the person intentionally fails to do the act or cause the result required by the statutes, even though the person may not know of the existence or constitutionality of the statute or the scope or meaning of the term used in the statute;
(f) "Knows," or has "knowledge," has actual knowledge of it. A person does not know of a fact merely because the person has reason to know of the fact;
(g) "Notice," is given by a corporation to a person when mailed to the person at the last known address of the person, when communicated to the person orally, when handed to the person, when left at the office of the person with a clerk or other person in charge of the office, or if there is no one in charge, when left in a conspicuous place in the office, or if the office is closed or the person to be notified has no office, or when left at the dwelling house or usual place of abode of the person with some person of suitable age and discretion then residing therein. Notice is given to a corporation when mailed or delivered to it at its registered office. Notice by mail is given when deposited in the United States mail with sufficient postage affixed;
(h) "Officer," a person elected, appointed, authorized, or otherwise designated as an officer by the board, and any other person considered elected as an officer;
(i) "Organization," a domestic or foreign corporation partnership, limited partnership, joint venture, association, business trust, estate, trust, enterprise and any other legal or commercial entity;
(j) "Outstanding shares," all shares duly issued and not reacquired by a corporation;
(k) "Series," a category of shares, within a class of shares authorized or issued by a corporation by or pursuant to its articles, that have some of the same rights and preferences as other shares within the same class, but that differ in designation or one or more rights and preferences from another category of shares within that class.
SL 1990, ch 369, § 103; SL 1994, ch 351, § 128; SL 2005, ch 202, § 7.
SDCL § 47-33-4 Factors considered by board in discharging duties.
47-33-4. Factors considered by board in discharging duties.
(1) In discharging the duties of their respective positions in taking action which may involve or relate to a change or potential change in the control of a domestic public corporation, and in determining what they reasonably believe to be in the best interest of the corporation, the board and individual directors may, in addition to considering the effects of any such action on the shareholders, consider any of the following:
(a) The long-term as well as the short-term interests of the corporation and its shareholders, including the possibility that these interests may be best served by the continued independence of the corporation;
(b) The effects of the action on the corporation's employees, customers, creditors and suppliers of goods and services;
(c) The effects of the action upon any community in which an office or other facility of the corporation is located; and
(d) The economy of this state and the nation. The consideration of those factors shall not constitute a violation of the director's fiduciary duty to the corporation or its shareholders, including, without limiting the generality of the foregoing, a director's duty of loyalty.
(2) If on the basis of the factors described in subdivision (1), the board determines that a change or potential change in the control of the domestic public corporation is not in the best interest of the corporation, it may reject a proposal or offer made to effect the change or potential change in the control of the corporation. If the board determines to reject any such proposal or offer, the board shall have no obligation to facilitate, remove any barriers to, or refrain from impeding the proposal or offer. Without limiting the generality of the foregoing, in the event the board determines that a change or potential change in the control of the domestic public corporation is not in the best interest of the corporation, the board shall have no obligation to redeem or to render inapplicable any rights or options described in § 47-33-5.
SL 1990, ch 369, § 104.
SDCL § 47-33-5 Creation of shares--Rights and options.
47-33-5. Creation of shares--Rights and options.
Subject to any provisions contained in its articles, which shall be applicable only to rights or options created or issued thereafter, a domestic public corporation may create and issue, by way of distributions to shareholders, as dividends or otherwise, rights or options entitling the holders thereof to purchase from the corporation shares of any class or series. Such rights or options shall be evidenced in such manner as the board shall approve and shall set forth the terms upon which, the time within which, and the price at which such shares may be purchased from the corporation upon the exercise of any such right or option. The terms and conditions of such rights or options may include, without limitation, provisions which adjust the option price or number of shares issuable under such rights or options in the event of an acquisition of shares or a reorganization, merger, consolidation, sale of assets or other occurrence involving the domestic public corporation, and restrictions or conditions that preclude or limit the entitlement, exercise or transfer of such rights or options by any person or persons who, after the date of the creation or issuance of such rights or options, acquires, obtains the right to acquire or offers to acquire, directly or indirectly, beneficial ownership of a specified number or percentage of the domestic public corporation's outstanding voting shares or other shares of the corporation, or that invalidate or void such rights or options held by any such person or persons. This section applies to rights or options created or issued before, on or after February 21, 1990.
SL 1990, ch 369, § 105.
SDCL § 47-33-6 Right to sue.
47-33-6. Right to sue.
An acquiring person, an interested shareholder, a domestic public corporation and shareholders of a domestic public corporation may sue at law or in equity to enforce the provisions of this chapter.
SL 1990, ch 369, § 106.
SDCL § 47-33-7 Conflicting provisions of law.
47-33-7. Conflicting provisions of law.
(1) The requirements of this chapter are in addition to the requirements of other applicable law and any requirements contained in either the articles or bylaws of a domestic public corporation. For the purpose of applying this chapter, if any other provision of law is inconsistent with, in conflict with or contrary to this chapter, that provision does not apply to the extent that it is inconsistent with, in conflict with or contrary to this chapter and the provisions of this chapter shall prevail over that other provision.
(2) Notwithstanding subdivision (1), any provision of this chapter which is inconsistent with, in conflict with or contrary to § 49-33-14.2 or 49-33-31 shall not apply to a domestic public corporation organized under chapter 49-33.
SL 1990, ch 369, § 107.
SDCL § 47-33-8 Control share acquisition--Voting rights.
47-33-8. Control share acquisition--Voting rights.
Unless the corporation's articles expressly provide, before the control share acquisition, that §§ 47-33-8 to 47-33-16, inclusive, do not apply to control share acquisitions of shares of the corporation, the shares of a domestic public corporation acquired by an acquiring person in a control share acquisition that exceed the threshold of voting power of any of the ranges specified in subdivision 47-33-9(4) shall have only the voting rights as shall be accorded to them pursuant to § 47-33-12.
SL 1990, ch 369, § 201.
SDCL § 47-33-9 Information statement by control share acquisitioner--Controls.
47-33-9. Information statement by control share acquisitioner--Controls.
Any person who proposes to make or has made a control share acquisition may at the person's election deliver an information statement to the domestic public corporation at the domestic public corporation's principal office. The information statement shall set forth all of the following:
(1) The identity of the acquiring person, including the identity of each member of any limited liability company, partnership, limited partnership, syndicate, or other group constituting the acquiring person, and the identity of each affiliate and associate of the acquiring person, including the identity of each affiliate and associate of each member of such partnership, syndicate, or other group. However, with respect to a limited partnership, the information need only be given with respect to a partner who is denominated or functions as the general partner and each affiliate and associate of the general partner;
(2) A statement that the information statement is made under this section;
(3) The number and class or series of shares of the domestic public corporation beneficially owned, directly or indirectly, before the control share acquisition by each of the persons identified pursuant to subsection (1);
(4) The number and class or series of shares of the domestic public corporation acquired or proposed to be acquired pursuant to the control share acquisition by each of the persons identified pursuant to subsection (1) and specification of which of the following ranges of voting power in the election of directors that, except for this section, resulted or would result from consummation of the control share acquisition:
(a) At least twenty percent but less than thirty-three and one-third percent;
(b) At least thirty-three and one-third percent but less than or equal to fifty percent;
(c) Over fifty percent; and
(5) The terms of the control share acquisition or proposed control share acquisition, including, without limiting the generality of the foregoing, the source of funds or other consideration and the material terms of the financial arrangements for the control share acquisition; plans or proposals of the acquiring person, including plans or proposals under consideration, to (a) liquidate or dissolve the domestic public corporation, (b) sell all or a substantial part of its assets, or merge it or exchange its shares with any other person, (c) change the location of its principal place of business or its principal executive office or of a material portion of its business activities, (d) change materially its management or policies of employment, (e) change materially its charitable or community contributions or its policies, programs, or practices relating thereto, (f) change materially its relationship with its suppliers of goods or services or customers or the communities in which it operates, or (g) make any other material change in its business, corporate structure, management, or personnel; and other objective facts as would be substantially likely to affect the decision of a shareholder with respect to voting on the control share acquisition.
If any material change occurs in the facts set forth in the information statement, including, but not limited to, any material increase or decrease in the number of shares of the domestic public corporation acquired or proposed to be acquired by the persons identified pursuant to subsection (1), the acquiring person shall promptly deliver to the domestic public corporation at its principal executive office an amendment to the information statement containing information relating to the material change. An increase or decrease or proposed increase or decrease equal, in the aggregate, for all persons identified pursuant to subsection (1) of one percent or more of the total number of outstanding shares of any class or series of the domestic public corporation shall be deemed "material" for the purpose of this section; an increase or decrease or proposed increase or decrease of less than this amount may be material, depending upon the facts and circumstances.
SL 1990, ch 369, § 202; SL 1994, ch 351, § 129.
SDCL § 47-33-10 Request for special meeting by acquiring person--Consideration of voting rights.
47-33-10. Request for special meeting by acquiring person--Consideration of voting rights.
(1) If the acquiring person so requests in writing at the time of delivery of an information statement pursuant to § 47-33-9, and has made, or has made a bona fide written offer to make, a control share acquisition and gives a written undertaking to pay or reimburse the domestic public corporation's expenses of a special meeting, except the expenses of the domestic public corporation in opposing according voting rights with respect to shares acquired or to be acquired in the control share acquisition, within ten days after receipt by the domestic public corporation of the information statement, a special meeting of the shareholders of the domestic public corporation shall be called for the sole purpose of considering the voting rights to be accorded shares referred to in § 47-33-8 acquired or to be acquired pursuant to the control share acquisition.
(2) The special meeting shall be held no later than fifty days after receipt of the information statement, unless the acquiring person agrees to a later date. If the acquiring person so requests in writing at the time of delivery of the information statement, the special meeting shall not be held sooner than thirty days after receipt by the domestic public corporation of the information statement.
(3) If no request for a special meeting is made, consideration of the voting rights to be accorded shares referred to in § 47-33-8 acquired or to be acquired pursuant to the control share acquisition shall be presented to the next special or annual meeting of the shareholders, unless prior thereto the matter of the voting rights becomes moot.
SL 1990, ch 369, § 203.
SDCL § 47-33-11 Notice of special shareholders meeting.
47-33-11. Notice of special shareholders meeting.
The notice of the meeting shall be given to all shareholders of record as of the record date set for the meeting, whether or not entitled to vote at the meeting. The notice shall at a minimum be accompanied by a copy of the information statement, and a copy of any amendment to the information statement previously delivered to the domestic public corporation, and a statement disclosing that the board of the domestic public corporation recommends approval of, expresses no opinion and is remaining neutral toward, recommends rejection of, or is taking no position or making no recommendation with respect to according voting rights to the shares referred to in § 47-33-8 acquired or to be acquired in the control share acquisition. Any amendments to the information statement received after mailing the notice of and prior to the meeting shall be mailed promptly to the shareholders by the domestic public corporation.
SL 1990, ch 369, § 204.
SDCL § 47-33-12 Voting rights of shares acquired in control share acquisition.
47-33-12. Voting rights of shares acquired in control share acquisition.
(1) Shares referred to in § 47-33-8 acquired in a control share acquisition shall have the same voting rights as other shares of the same class or series only if approved by a resolution of shareholders of the domestic public corporation at a special or annual meeting of shareholders pursuant to § 47-33-10.
(2) The resolution of shareholders must be approved by:
(a) The affirmative vote of the holders of the majority of the voting power of all outstanding shares entitled to vote including all shares held by the acquiring person; and
(b) The affirmative vote of the holders of the majority of the voting power of all outstanding shares entitled to vote excluding all interested shares.
A class or series of shares of the domestic public corporation is entitled to vote separately as a class or series if any provision of the control share acquisition would, if contained in a proposed amendment to the articles, entitle the class or series to vote separately as a class or series.
(3) To have the voting rights accorded by approval of a resolution of shareholders, any proposed control share acquisition not consummated prior to the time of the shareholder approval must be consummated within one hundred eighty days after the shareholder approval.
(4) Any shares referred to in § 47-33-8 acquired in a control share acquisition that do not have voting rights accorded to them by approval of a resolution of shareholders shall regain their voting rights upon transfer to a person other than the acquiring person or any affiliate or associate of the acquiring person unless the acquisition of the shares by the other person constitutes a control share acquisition, in which case the voting rights of the shares are subject to the provisions of this article.
SL 1990, ch 369, § 205.
SDCL § 47-33-13 Redemption of shares in absence of information statement or negative vote by shareholders.
47-33-13. Redemption of shares in absence of information statement or negative vote by shareholders.
Unless otherwise expressly provided in the articles of a domestic public corporation before a control share acquisition has occurred, the domestic public corporation shall have the option to call for redemption of all but not less than all shares referred to in § 47-33-8 acquired in a control share acquisition, at a redemption price equal to the market value of the shares at the time of the call for redemption, in the event:
(1) An information statement has not been delivered to the domestic public corporation by the acquiring person by the tenth day after the control share acquisition; or
(2) An information statement has been delivered but the shareholders have voted not to accord voting rights to such shares pursuant to § 47-33-12.
The call for redemption shall be given by the domestic public corporation within thirty days after the domestic public corporation has knowledge of the event giving the domestic public corporation the option to call the shares for redemption and the shares shall be redeemed within sixty days after the call is given.
SL 1990, ch 369, § 206.
SDCL § 47-33-14 Right to demand fair value of voting shares--Notice of right of demand.
47-33-14. Right to demand fair value of voting shares--Notice of right of demand.
(1) Unless otherwise provided in the articles of the domestic public corporation before the control share acquisition has occurred, in the event control shares acquired in the control share acquisition are accorded voting rights pursuant to § 47-33-12 and the acquiring person beneficially owns a majority or more of all voting shares, all shareholders of the domestic public corporation who did not vote to approve the resolution pursuant to § 47-33-12 shall have the right to make written demand on the acquiring person for payment of the fair value of the voting shares of the corporation held by the shareholder and the acquiring person shall be required to pay the fair value, plus interest, to the shareholder in cash pursuant to the procedures herein specified. Interest shall be payable on the fair value of the shares at the Category C rate of interest provided in § 54-3-16 from and after the date the control shares acquired in the control share acquisition are accorded full voting rights pursuant to § 47-33-12.
(2) As used in this section, "fair value" includes an increment representing a proportion of any value payable for acquisition of control of the corporation and, in no event, shall be less than the highest price paid per share by the acquiring person in the control share acquisition for other shares of the same class or series.
(3) As soon as practicable after such events have occurred, the acquiring person shall cause a notice to be delivered to all shareholders of the domestic public corporation:
(a) Advising them that all shareholders who did not vote to accord voting rights to the control shares pursuant to § 47-33-12 are entitled to demand that they be paid the fair value of their shares;
(b) Advising them that the minimum value any such shareholder can receive under this section is the highest price paid per share by the acquiring person in the control share acquisition for other shares of the same class or series and stating that value, plus interest;
(c) Stating the acquiring person's opinion of the fair value of the shares, explaining the basis upon which that value was determined, and offering to pay each shareholder that amount in cash for each share, plus interest, upon receiving the shareholder's agreement to accept it; however, in no event shall the amount offered by the acquiring person be less than the minimum value the shareholder can receive under this section;
(d) Advising them that any such shareholder may elect to employ the procedure set forth in § 47-33-15 for a determination of the fair value of his shares if the shareholder believes the fair value of his shares is higher than the amount offered by the acquiring person; and
(e) Stating the address to which such shareholders may send their demands to be paid the fair value of their shares and the time within which the shareholders must submit their demands, which shall not be less than thirty days from the date of mailing of the notice by the acquiring person to the shareholders.
The notice shall also include copies of this section and § 47-33-15 and a form which may be used by the shareholder for demanding payment pursuant to § 47-33-15.
(4) The provisions of this section shall not preclude an acquiring person from purchasing voting shares of the corporation at a price other than the fair value of those shares and does not preclude any shareholder from agreeing to sell his voting shares at that or any other price to any person.
SL 1990, ch 369, § 207.
SDCL § 47-33-15 Written demand for fair value of shares--Remittance by acquiring person--Court settlement after sixty days--Court procedure--Costs.
47-33-15. Written demand for fair value of shares--Remittance by acquiring person--Court settlement after sixty days--Court procedure--Costs.
(1) Any shareholder of the domestic public corporation who receives the notice required by § 47-33-14 and who is entitled to and desires to receive fair value for his shares from the acquiring person, may make written demand on the acquiring person for payment of the fair value of his shares. The written demand shall be sent by the shareholder to the acquiring person to the address and within the time period specified in the notice. The demand of the shareholder shall state the number and class or series, if any, of the shares owned by him with respect to which the demand is made and shall also state the amount the shareholder is willing to accept in payment for those shares from the acquiring person. Any shareholder who does not make such written demand within such time period shall have no further right to receive payment from the acquiring person required by § 47-33-14 for the shares owned by him with respect to which no written demand was made.
(2) Immediately upon receipt of a demand for payment from a shareholder pursuant to this section, the acquiring person shall remit to the shareholder either the amount demanded by the shareholder or the amount offered by the acquiring person in the notice required by § 47-33-14, together with interest to the date of payment. If the remittance made by the acquiring person is less than the amount demanded by the shareholder, the remittance shall be accompanied by a notice from the acquiring person of the shareholder's right to demand supplemental payment, accompanied by copies of this section and § 47-33-14. Upon receipt of the remittance from the acquiring person pursuant to this subsection, the shareholder shall immediately transmit to the acquiring person the certificates for the certificated shares with respect to which the payment was made, duly endorsed for transfer to the acquiring person, and shall execute such documents provided by the acquiring person as are reasonably necessary to transfer any uncertificated shares to the acquiring person. Prior to receipt of the remittance from the acquiring person pursuant to this subsection, the shareholder shall retain the right to vote those shares and receive dividends and other distributions thereon and, thereafter, the acquiring person shall be entitled to vote such shares and receive dividends and other distributions thereon. The fair value of the dividends and other distributions received by the shareholder subsequent to the date the control shares were accorded voting rights pursuant to § 47-33-12 shall be subtracted from any amount owing to the shareholder by the acquiring person under § 47-33-14.
(3) If within sixty days after the acquiring person gives the notice pursuant to § 47-33-14, any of the demands for payment made by shareholders pursuant to subdivision (1) remain unsettled, the acquiring person shall file an action in the circuit court of the county of this state where the registered office of the domestic public corporation is located requesting that the fair value of such shares be determined by the court. All shareholders, wherever residing, whose demands have not been settled, shall be made parties to the proceeding. A copy of the petition shall be served on each such shareholder. The jurisdiction of the court shall be plenary and exclusive.
(4) The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value of the shares. The appraiser shall have such power and authority as shall be specified in the order of their appointment or in any amendment thereof. The parties to the proceeding shall be entitled to discovery in the same manner as in other civil actions. All shareholders who are made parties to such action shall be entitled, after a hearing without a jury, to judgment against the acquiring person for the amount by which the fair value of their shares is found to exceed the amount previously remitted by the acquiring person to the shareholder, with interest. If the acquiring shareholder fails to file an action as provided in this section, each shareholder who has made a timely demand and who has not already settled his claim against the acquiring person shall be paid by the acquiring person the amount demanded by the shareholder pursuant to subdivision (1), with interest, and may sue therefor in an appropriate court.
(5) The costs and expenses of any action under this section, including the reasonable compensation and expense of appraisers appointed by the court, shall be determined by the court and assessed against the acquiring person, except that any part of the costs and expenses may be apportioned and assessed as the court considers equitable against some or all of the shareholders who are parties and whose demand for payment in excess of the amount remitted by the acquiring person the court finds to be arbitrary, vexatious or not in good faith. Fees and expenses of counsel and of experts for the parties to the proceeding may be assessed as the court considers equitable against the acquiring person and in favor of any or all shareholders who are parties to the action if the acquiring person fails to comply substantially with the requirements of this section, and may be assessed against either the acquiring person or a shareholder in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this section and § 47-33-14. If the court finds that services of counsel for any shareholder were of substantial benefit to other shareholders similarly situated and should not be assessed against the acquiring person, it may award such counsel reasonable fees to be paid out of the amount awarded to the other shareholders who were benefited.
(6) Upon full payment by the acquiring person of all amounts required by this section, the shareholder shall cease to have any interest in the shares purchased by the acquiring person under this section.
SL 1990, ch 369, § 208.
SDCL § 47-33-16 Application of chapter to acquiring person--Application to non-public domestic corporations.
47-33-16. Application of chapter to acquiring person--Application to non-public domestic corporations.
(1) If a corporation is a domestic public corporation as of the acquiring person's share acquisition date, this chapter shall continue to apply to such corporation with respect to such acquiring person and its affiliates and associates, regardless of changes in the corporation which occur on or after that date which would otherwise result in the corporation ceasing to be a domestic public corporation, if such changes result, directly or indirectly, from action taken or proposed by or on behalf of, or pursuant to any written or unwritten agreement, arrangement, relationship, understanding, or otherwise with, the acquiring person or any affiliate or associate of the acquiring person, or from the transactions by which the person became an acquiring person or an interested shareholder.
(2) In addition to domestic public corporations, §§ 47-33-8 to 47-33-16, inclusive, shall also apply to a control share acquisition of shares of other domestic corporations that meet the requirements of a domestic public corporation except that the corporation is not a publicly-held corporation, if an express provision electing to be subject to §§ 47-33-8 to 47-33-16, inclusive, is contained in the articles of such corporation and the control share acquisition occurs after the effective date of the provision, in which event the term "domestic public corporation" as used in §§ 47-33-1 to 47-33-7, inclusive, and §§ 47-33-8 to 47-33-16, inclusive, shall be deemed to include such electing domestic corporation.
SL 1990, ch 369, § 209.
SDCL § 47-33-17 Business combinations between corporation and interested shareholder.
47-33-17. Business combinations between corporation and interested shareholder.
Except as provided in § 47-33-19 relating to the application and effect of this section, a domestic public corporation shall not engage at any time in any business combination with any interested shareholder of the corporation other than:
(1) A business combination approved by the board of directors of the domestic public corporation prior to the interested shareholder's share acquisition date, or where the purchase of shares made by the interested shareholder on the interested shareholder's share acquisition date has been approved by the board of directors of the domestic public corporation prior to the interested shareholder's share acquisition date.
(2) A business combination approved:
(a) By the affirmative vote of the holders of a majority of the outstanding voting shares, not including any voting shares beneficially owned by the interested shareholder or any affiliate or associate of such interested shareholder, at a meeting called for such purpose no earlier than three months after the interested shareholder became, and if at the time of the meeting the interested shareholder is, the beneficial owner, directly or indirectly, of at least eighty percent of the voting shares, if the business combination also satisfies all the conditions of § 47-33-18; or
(b) By the affirmative vote of all of the holders of all of the outstanding voting shares.
(3) A business combination approved by the affirmative vote of the holders of a majority of the outstanding voting shares, not including any voting shares beneficially owned by the interested shareholder or any affiliate or associate of the interested shareholder, at a meeting called for such purpose no earlier than four years after the interested shareholder's share acquisition date.
(4) A business combination approved by a majority of the outstanding voting shares at a shareholder's meeting called for such purpose no earlier than four years after the interested shareholder's share acquisition date, if the business combination also satisfies all of the conditions of § 47-33-18.
SL 1990, ch 369, § 301.
SDCL § 47-33-18 Required conditions for business combination--Aggregate amount of cash and marked value--Consideration--Beneficial owners.
47-33-18. Required conditions for business combination--Aggregate amount of cash and marked value--Consideration--Beneficial owners.
A business combination conforming to subsection 47-33-17(2)(a) and subdivision 47-33-17(4) shall also meet all of the following conditions:
(1) 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 common shares of such domestic public corporation in the business combination is at least equal to the higher of the following:
(a) The highest per share price, including any brokerage commissions, transfer taxes and soliciting dealer's fees, paid by the interested shareholder for any common shares of the same class or series acquired by it: (i) within the three-year period immediately prior to the announcement date with respect to such business combination, or (ii) within the three-year 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 common share since such earliest date, up to the amount of the interest.
(b) The market value per common share on the announcement date with respect to the business combination or on the interested shareholder's share acquisition date, whichever is higher; plus interest compounded annually from such 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 common share since such date, up to the amount of the interest.
(2) 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 shares, other than common shares, of the corporation is at least equal to the highest of the following, whether or not the interested shareholder has previously acquired any shares of such class or series of shares:
(a) The highest per-share price, including any brokerage commissions, transfer taxes and soliciting dealer's fees, paid by the interested shareholder for any shares of such class or series of shares acquired by it: (i) within the three-year period immediately prior to the announcement date with respect to the business combination, or (ii) within the three-year 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 such class or series of shares since such earliest date, up to the amount of the interest.
(b) The highest preferential amount per share to which the holders of shares of such class or series of shares are entitled in the event of any voluntary liquidation, dissolution or winding up of the corporation, plus the aggregate amount of any dividends declared or due as to which such holders are entitled prior to payment of dividends on some other class or series of shares, unless the aggregate amount of the dividends is included in such preferential amount.
(c) The market value per share of such class or series of shares on the announcement date with respect to the business combination or on the interested shareholder's share acquisition date, whichever is higher; plus interest compounded annually from such 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 such class or series of shares since such date, up to the amount of the interest.
(3) The consideration to be received by holders of a particular class or series of outstanding shares, including common shares, of the 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 such class or series of shares previously acquired by it, and the consideration shall be distributed promptly.
(4) The holders of all outstanding shares of the 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 such shares in compliance with subsections (1), (2), and (3) of this section.
(5) After the interested shareholder's share acquisition date and prior to the consummation date with respect to the business combination, the interested shareholder has not become the beneficial owner of any additional voting shares of such corporation except:
(a) As part of the transaction which resulted in such interested shareholder becoming an interested shareholder;
(b) By virtue of proportionate splits of shares, share dividends, or other distributions of shares in respect of shares not constituting a business combination;
(c) Through a business combination meeting all of the conditions of subsection 47-33-17(1), (2), (3), or (4);
(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 such purchase, would have satisfied the requirements of subsection (1), (2), and (3) of this section; or
(e) Through purchase required by and pursuant to the provisions of, and at no less than the fair value including interest to the date of payment as determined by the court under § 47-33-15 relating to valuation procedures or, if such fair value was not then so determined, then at a price that would satisfy the conditions in subparagraph (d) of this subsection.
SL 1990, ch 369, § 302.
SDCL § 47-33-19 Conditions making § 47-33-17 inapplicable--Effect of corporation changes after acquisition date.
47-33-19. Conditions making § 47-33-17 inapplicable--Effect of corporation changes after acquisition date.
(1) Section 47-33-17 shall not apply to any business combination of a domestic public corporation:
(a) If the articles of the domestic public corporation provide that this article shall not be applicable to the domestic public corporation:
(i) By a provision included in the original articles expressly electing not to be subject to § 47-33-17; or
(ii) By an article amendment approved by the holders of two-thirds of its outstanding voting shares, excluding the voting shares of interested shareholders and their affiliates and associates, expressly electing not to be subject to § 47-33-17, and the amendment provides that it is not to be effective until eighteen months after the vote of the shareholders and provides that it does not apply to any business combination of the domestic public corporation with an interested shareholder whose share acquisition date is on or before the effective date of the amendment.
(b) If the business combination was consummated before, or if a binding agreement for the business combination was entered into before, February 21, 1990.
(c) With an interested shareholder which became an interested shareholder inadvertently, if such interested shareholder, (i) as soon as practicable, divests itself of a sufficient amount of the voting shares of such domestic public corporations so that it is no longer the beneficial owner, directly or indirectly, of ten percent or more of the outstanding voting shares of such domestic public corporation, and (ii) would not at any time within the three-year period preceding the announcement date with respect to such business combination have been an interested shareholder but for such inadvertent acquisition.
(d) With an interested shareholder who was an interested shareholder on February 21, 1990, and remains so continuously thereafter, unless subsequent to that date the interested shareholder increased its beneficial ownership of the outstanding voting shares of the domestic public corporation to a proportion in excess of the voting shares that the interested shareholder beneficially owned on February 21, 1990, excluding an increase approved by the board of the domestic public corporation before the increase occurred.
(e) With an interested shareholder who was an interested shareholder on February 21, 1990, and subsequent to that date inadvertently increased its beneficial ownership of the outstanding voting shares of the domestic public corporation to a proportion in excess of the proportion of voting shares that the interested shareholder beneficially owned immediately before that date, if the interested shareholder divests itself of a sufficient amount of voting shares so that the interested shareholder is no longer the beneficial owner of a proportion of the outstanding voting shares in excess of the proportion of the outstanding voting shares that the interested shareholder beneficially owned on February 21, 1990.
(2) If a corporation is a domestic public corporation as of the interested shareholder's share acquisition date, this chapter shall continue to apply to such corporation with respect to such interested shareholder and its affiliates and associates, regardless of any changes in the corporation which occur on or after that date which would otherwise result in the corporation ceasing to be a domestic public corporation, if such changes result, directly or indirectly, from action taken or proposed by or on behalf of, or pursuant to any written or unwritten agreement, arrangement, relationship, understanding or otherwise with, the interested shareholder or any affiliate or associate of the interested shareholder or from the transactions by which the person became an interested shareholder.
(3) In addition to domestic public corporations, §§ 47-33-17 to 47-33-19, inclusive, shall apply to any business combination of other domestic corporations that meet the requirements of a domestic public corporation except that the corporation is not a publicly held corporation, if an express provision electing to be subject to §§ 47-33-17 to 47-33-19, inclusive, is contained in the articles of such domestic corporation, in which event the term "domestic public corporation" as used in §§ 47-33-1 to 47-33-7, inclusive, and §§ 47-33-17 to 47-33-19, inclusive, shall be deemed to include such electing domestic corporation.
SL 1990, ch 369, § 303.
Source: South Dakota Legislature (sdlegislature.gov)URL: https://sdlegislature.gov/Statutes/47-33Fetched: 10/20/2026