2023 Pennsylvania Consolidated & Unconsolidated Statutes › Title 15 - CORPORATIONS AND UNINCORPORATED ASSOCIATIONS › Chapter 19 - Fundamental Changes › Section 1906 - Special treatment of holders of shares of same class or series

§ 1906. Special treatment of holders of shares of same class or series.
(a) General rule.--
Except as otherwise restricted in the articles, a plan may contain a provision classifying the holders of shares of a class or series into one or more separate groups by reference to any facts or circumstances that are not manifestly unreasonable and providing mandatory treatment for shares of the class or series held by particular shareholders or groups of shareholders that differs materially from the treatment accorded other shareholders or groups of shareholders holding shares of the same class or series (including a provision modifying or rescinding rights previously created under this section) if:
(1) (i) the plan is approved by a majority of the votes cast by any class or series of shares any of the shares of which are so classified into groups, whether or not such class or series would otherwise be entitled to vote on the plan; and
(ii) the provision voted on specifically enumerates the type and extent of the special treatment authorized; or
(2) under all the facts and circumstances, a court of competent jurisdiction finds such special treatment is undertaken in good faith, after reasonable deliberation and is in the best interest of the corporation.
(b) Statutory voting rights upon special treatment.--
Except as provided in subsection (c), if a plan contains a provision for special treatment, each group of holders of any outstanding shares of a class or series who are to receive the same special treatment under the plan shall be entitled to vote as a special class in respect to the plan regardless of any limitations stated in the articles or bylaws on the voting rights of any class or series.
(c) Dissenters rights upon special treatment.--
If any plan contains a provision for special treatment without requiring for the adoption of the plan the statutory class vote required by subsection (b), the holder of any outstanding shares the statutory class voting rights of which are so denied, who objects to the plan and complies with Subchapter D of Chapter 15 (relating to dissenters rights), shall be entitled to the rights and remedies of dissenting shareholders provided in that subchapter.
(c.1) Determination of groups.--
For purposes of applying subsections (a)(1) and (b), the determination of which shareholders are part of each group receiving special treatment shall be made as of the record date for shareholder action on the plan.
(c.2) Notice to shareholders.--
A notice to shareholders of a meeting called to act on a plan that provides for special treatment must state that the plan provides for special treatment. The notice must identify the shareholders receiving special treatment unless the notice is accompanied by either a summary of the plan that includes that information or the full text of the plan.
(d) Exceptions.--
This section shall not apply to:
(1) (Reserved).
(2) A provision of a plan that offers to all holders of shares of a class or series the same option to elect certain treatment.
(3) A plan that contains an express provision that this section shall not apply or that fails to contain an express provision that this section shall apply.
(4) A provision of a plan that treats all of the holders of a particular class or series of shares differently from the holders of another class or series. A provision of a plan that treats the holders of a class or series of shares differently from the holders of another class or series of shares shall not constitute a violation of section 1521(d) (relating to authorized shares).
(e) Definition.--
As used in this section, the term "plan" means:
(1) an amendment of the articles that effects a reclassification of shares, whether or not the amendment is accompanied by a separate plan of reclassification;
(1.1) a plan of asset transfer adopted under section 1932(b) (relating to voluntary transfer of corporate assets); or
(2) a resolution recommending that the corporation dissolve voluntarily adopted under section 1972(a) (relating to proposal of voluntary dissolution).
(Dec. 19, 1990, P.L.834, No.198, eff. imd.; June 22, 2001, P.L.418, No.34, eff. 60 days; July 9, 2013, P.L.476, No.67, eff. 60 days; Oct. 22, 2014, P.L.2640, No.172, eff. July 1, 2015)
2014 Amendment.
Act 172 amended subsecs. (a), (d)(1) and (e) and added subsec. (c.2).
2013
Amendment
.
Act 67 amended subsec. (d)(3) and added subsec. (c.1).
Cross References.
Section 1906 is referred to in sections 1103, 1521, 1571, 1911, 1932, 1972, 2537 of this title.