We have a stockholder rights plan that is intended to protect our substantial net operating losses, or NOL, carryforwards and related tax benefits. Under recently modified federal tax laws, we generally can use our NOLs generated in the 2018-2020 period and certain related tax credits to reduce ordinary income tax paid in our prior five tax years or indefinitely against future income. Beginning in 2021, NOLs can only be used to shelter future income. Many of our NOLs arose before 2018 -- such losses can be carried forward for up to 20 years, at which point they will expire for tax purposes.
Our ability to use our NOLs could be substantially limited if we experience an “ownership change,” as defined under Section 382 of the Internal Revenue Code of 1986, as amended ( the “Code”) and the rights plan has been designed to help prevent such an “ownership change.” Under Section 382 of the Code, an “ownership change” occurs if, over a rolling three-year period, there has been an aggregate increase of 50 percentage points or more in the percentage of our common stock owned by one or more of our “5-percent stockholders” (as determined under Section 382 of the Code). The rights plan provides that if any person becomes the beneficial owner (as defined in the Code) of 4.9% or more of our common stock, stockholders other than the triggering stockholder will be entitled to acquire shares of common stock at a 50% discount or LSB may exchange each right held by such holders for one share of common stock. Under the Section 382 Rights Plan, any person which currently owns 4.9% or more of LSB’s common stock may continue to own its shares of common stock but may not acquire any additional shares without triggering the Section 382 Rights Plan. LSB’s Board of Directors has the discretion to exempt any person or group from the provisions of the Section 382 Rights Plan.
LSB intends to submit the Plan to a vote of its shareholders at its 2021 annual meeting. The Section 382 Rights Plan will expire on the day following the certification of the voting results for LSB’s 2021 annual meeting of shareholders, unless LSB’s shareholders ratify the Section 382 Rights Plan at or prior to such meeting, in which case the Section 382 Rights Plan will continue in effect until July 6, 2023, unless terminated earlier in accordance with its terms.