The hand is occupied while it is activated.
It's basically because of the following, I'll bold out the important part:
An iron band, this simple ring generates a shield-sized (and
shield-shaped) wall of force that stays with the ring and can be
wielded by the wearer as if it were a heavy shield (+2 AC). This
special creation has no armor check penalty or arcane spell failure
chance since it is weightless and encumbrance-free. It can be
activated and deactivated at will as a free action.
So, since you have to wield it as a heavy shield, it will take up your shield slot while it is on.
However, if you feel like it, you can activate and deactivate it as a free action, so turn it off at the beginning of your turn, smack some things around with your 2-hander, and turn it back on at the end of the turn.
(Free actions can only be taken on your turn.)