November 15, 2018

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Are Share Exchange Tender Offers Limited Only To Acquisitions Of California Corporations?

Recent posts have been discussing  California's regulation of "share exchange tender offers".  Corporations Code Section 183.5 defines a "share exchange tender offer" as:

"any acquisition by one corporation in exchange in whole or in part for its equity securities (or the equity securities of a corporation which is in control of the acquiring corporation) of shares of another corporation, other than an exchange reorganization (subdivision (b) of Section 181)."

Note that the definition refers to the acquisition of "shares of another corporation".  This short phrase uses two defined terms - "shares" (Section 184) and "corporation" (Section 162).  The latter is defined to refer to, unless otherwise expressly provided, a corporation organized under the General Corporation Law or subject to the GCL pursuant to Section 102(a).  Section 181(b) in contrast refers to the acquisition of the "equity securities of another domestic corporation, foreign corporation, or other business entity".  Although I suspect that the legislature may not have truly understood what it was doing, the use of defined terms in these two related statutes should not be ignored.  

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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