Opinion ID: 3011173
Heading Depth: 1
Heading Rank: 1

Heading: introduction

Text: AMP Incorporated brought suit under the Pennsylvania Business Corporation Law (PBCL), 15 Pa. Cons. Stat. Ann. S 2501 et seq. (West 1995), alleging that 20,000,100 shares of AMP stock acquired by AlliedSignal, Inc., amounting to 9.1% of outstanding AMP stock, are control shares within the meaning of the portion of the PBCL commonly known as the Control Share Acquisitions Statute, 15 Pa. Cons. Stat. Ann. SS 2561-68 (the Statute). AMP charged that because of a voting disqualification in the Statute, AlliedSignal could not vote those shares. The district court, construing the Statute, concluded that, although AlliedSignal's acquisition totaled less than 20% of the outstanding AMP stock, the numerical threshold for the voting disqualification, the Statute requires that shares bought with the intent to make a control share acquisition as defined by the Statute arecontrol shares, and so lose voting rights unless restored as provided in the Statute. Therefore, the court enjoined AlliedSignal from voting its shares. AlliedSignal and its subsidiary used in acquiring AMP shares, PMA Acquisition Corporation, appeal. We conclude that there must be a control-share acquisition triggered upon actual acquisition of at least 20% of the outstanding shares by an acquiring person before voting shares may be deemed control shares. Consequently, we will reverse.