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California Dividend Statutes Found To Preempt Common Law Claims

Chapter 5 of the California Corporations Code imposes specific limitations on “distributions to shareholders”, a term defined in Corporations Code section 166. Directors who approve the making of any distribution to...more

7/22/2014 - Board of Directors Dividends Preemption Professional Liability Shareholder Litigation Shareholders

Federal Court Rejects Court Of Chancery’s Privity Analysis

Two years ago, I wrote about La. Mun. Police Emples. Ret. Sys. v. Pyott, 46 A.3d 313 (Del. Ch. 2012) in which Vice Chancellor J. Travis Laster refused to give preclusive effect to federal district court’s dismissal of a...more

7/3/2014 - Derivative Standing Derivative Suit Shareholder Litigation Shareholders Standing

Federal Court Rules Boilermakers Didn’t Decide All Issues And Orders Company To File A Form 8-K

At first glance, the plaintiff’s position in Bushansky v. Armacost, 2014 U.S. Dist. LEXIS 88072 (N.D. Cal. June 25, 2014) seems a bit peculiar. The plaintiff had filed suit challenging Chevron Corporation’s adoption of an...more

6/30/2014 - Bylaws Chevron Class Action Delaware General Corporation Law Federal Jurisdiction Form 8-K Forum Selection Clause Shareholder Activism Shareholder Litigation Shareholders

If Fee-Shifting Bylaws Are Ever Put On Trial, This Case Should Be Exhibit A

Item 5.07(d) of Form 8-K requires issuers to disclose “the company’s decision in light of such vote as to how frequently the company will include a shareholder vote on the compensation of executives in its proxy materials...more

6/23/2014 - Board of Directors Bylaws Executive Compensation Form 8-K Proxy Statements Say-on-Pay SEC Shareholder Litigation Shareholders

Those Who Hold Themselves Apart Seem To Be Getting All The Attention

Who knew that abstentions were so newsworthy? Here are three recent news stories involving abstentions at annual meetings...more

6/10/2014 - CalPERS Coca Cola Shareholder Litigation Shareholders Warren Buffet

What Good Can Come From Letting The Indifferent and Undecided Hold Sway?

I’ve written many posts on the subject of voting because it seems so straightforward and yet turns out to be complex. In tackling any voting problem, it is important to know and understand the applicable voting rule. An...more

6/5/2014 - Abstention Berkshire Hathaway Coca Cola Corporate Counsel Corporate Governance Delaware General Corporation Law Proxies Shareholder Votes Shareholders

Delaware Court Rules Nevada Law Governs But Applies Delaware Law

Although there are many significant differences between the corporate laws of Nevada and Delaware, the Nevada Supreme Court has often looked across the country to Delaware. Thus, the Nevada high court has adopted Delaware’s...more

5/23/2014 - Breach of Duty Corporate Restructuring Delaware General Corporation Law Demand Futility Fiduciary Duty Restructuring Shareholders

Some Things That The Corporations Code Doesn’t Tell You About Annual Meetings

Annual meetings of shareholders are important. If a corporation fails to hold one for a period of 60 days after the designated date or, if no date is designated, for 15 months, then the superior court may summarily order a...more

5/21/2014 - Annual Meeting Corporate Governance Delaware General Corporation Law Shareholders Voting Rights

A Shot In A Mug Of Beer May Not Be The Answer To This Exclusive Forum Bylaw Case

In March, Safeway and Albertsons announced that they had entered into a definitive merger agreement. As night follows day, litigation ensued. At least 12 class action complaints were filed by alleged stockholders of...more

5/12/2014 - Albertsons Bylaws Class Action Federal Jurisdiction Forum Selection Clause Internal Affairs Doctrine Merger Agreements Mergers Safeway Inc Shareholder Litigation Shareholders

Is It Necessary To Check With The Shareholders Before Hocking The Corporate Crown Jewels?

Corporations Code Section 1001(a) authorizes a corporation to “sell, lease, convey, exchange, transfer, or otherwise dispose of all or substantially all of its assets” if the principal terms are approved by the board, and,...more

4/24/2014 - Board of Directors Corporate Governance Shareholders

Is This Proposed Amendment To Delaware’s Stockholder Consent Statute Really Needed?

Recently, I wrote about a proposal to amend Section 141(f) of the Delaware General Corporation Law to permit inchoate directors to take action by written consent. The Corporation Law Section of the Delaware State Bar is...more

4/18/2014 - Board of Directors Delaware General Corporation Law Proxies Shareholders Written Consent

California’s RULLCA Impossible Pleading Requirement For Derivative Suits

California’s Revised Uniform Limited Liability Company Act requires a member of a domestic or foreign LLC to include two specific allegations in any complaint brought in the right of the company. Failure to include these two...more

4/7/2014 - Derivative Suit LLC Pleadings RULLCA Shareholder Litigation Shareholder Rights Shareholders

Should Corporations Conserve Water Because A Shareholder Believes It’s The Right Thing To Do?

Last month, the California Public Employees Retirement System (CalPERS) sent a letter to its California real estate and private equity managers asking that they take a number of steps to conserve water. I found CalPERS’...more

3/6/2014 - CalPERS Conservation Corporate Social Responsibility Shareholders Water

Investor Voice May Rue Adoption Of Single Voting Standard

In yesterday’s post, I discussed why the Council of Institutional Investor’s blanket policy eschewing the counting of abstentions may be neither good nor legal. CII, however, isn’t the only proponent of not counting...more

2/4/2014 - Proxy Season Proxy Voting Guidelines Shareholder Votes Shareholders

On Closer Inspection, This CII “Best Practice” May Be Neither Good Nor Legal

The Council of Institutional Investors has adopted what it describes as ”a comprehensive body of corporate governance best practices”, including Policies on Corporate Governance. I question, however, whether some of these...more

2/3/2014 - Corporate Governance Investors NYSE Shareholder Rights Shareholder Votes Shareholders

This Plaintiff Dreamed Of Shares That Never Were

It’s hard for me to imagine being the owner of something that doesn’t exist. It’s even harder to imagine being the owner of something that doesn’t exist. Hardest of all is imagining being the equitable owner of something...more

1/31/2014 - Derivative Suit Securities Securities Litigation Shareholders

A Modest Proposal For Preventing M&A Deals From Being A Burden to Shareholders or Corporations, and For Making Them Beneficial to...

According to Cornerstone Research, shareholders in 2012 “challenged 93 percent of merger and acquisition (M&A) deals valued over $100 million and 96 percent of transactions valued over $500 million”. Most of those cases...more

1/15/2014 - Acquisitions Mergers Shareholders

40% Is Less Than A Majority But Can It Be “Control”?

Yesterday’s post concerned the Court of Appeal’s opinion in Busse v. United Panam Financial Corp., 2014 Cal. App. LEXIS 11 (Cal. App. 4th Dist. Jan. 8, 2014) holding that shareholders may not pursue monetary damages under...more

1/14/2014 - Corporate Governance Majority Voting Policies Minority Shareholders Shareholder Votes Shareholders

Numera Senatum! Broker Non-Votes And The Quorum Problem

In ancient Rome, the Senate could not conduct business unless a quorum was present. A senator wishing to delay action by the Senate could demand a quorum count by demanding “numera senatum!,” meaning count the house. The...more

12/19/2013 - Corporate Governance Corporate Governance Policy Shareholder Votes Shareholders

The Arcana Of Dating Stockholder Consents

Long ago, I had the temerity to write about Delaware’s statutes concerning stockholder consents, Delaware’s Inadequate Protection of Shareholders When Action Is Taken by Consent, 11 Bus. Law. Update 4 (1991). The law of...more

12/13/2013 - Consent Contract Drafting Corporate Records Shareholders

An Unexpected Impasse

If a corporation has four directors and two shareholders, one owning 60 shares and the other owning 40 shares, it seems obvious that the majority shareholder should be able to elect a majority of the board of directors. ...more

11/13/2013 - Board of Directors Directors Shareholder Votes Shareholders

Just Who Is A Promoter And Why You May Want To Know

The California General Corporation Law uses, but does not define, the term “promoter”. For example, a promoter can be criminally prosecuted. Corporations Code Section 2251 provides that any promoter “who knowingly and...more

11/11/2013 - Fraud Securities Exchange Act Shareholders Stock Promoters

Where Exactly Is It Written That Shareholders Aren’t Liable For Corporate Debts?

Recently, UCLA Law School Professor Stephen Bainbridge took notice of Section 6.22(b) of the Model Business Corporation Act and asked what might lead a corporation to waive the limited liability of shareholders in its...more

11/8/2013 - Articles of Incorporation Debt Personal Liability Shareholders

Court Of Appeal Holds Breach Of Fiduciary And Conflict Of Interest May Be Grounds For Summary Election Challenge

Section 709 of the California Corporations Code creates a summary procedure that allows any shareholder or any person who claims to have been denied the right to vote to petition the Superior Court for a determination of the...more

10/11/2013 - Board of Directors Conflicts of Interest Corporate Governance Fiduciary Duty Shareholder Votes Shareholders

Is A Popularity Contest The Best Way To Pick An Advisor?

Koheleth wrote that “there is nothing new under the sun”, but there are a many ideas that are new to me. Such is the case with the shareholder proposal recently submitted by James McRitchie (Corpgov.net) to Cisco Systems,...more

8/22/2013 - Cisco Proxy Advisors Shareholders

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