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- Title
Pandora's Ballot Box, Or a Proxy with Moxie? Majority Voting, Corporate Ballot Access, and the Legend of Martin Lipton Re-Examined.
- Authors
Verret, J. W.
- Abstract
In August 2006 the Delaware General Assembly adopted an amendment to the Delaware General Corporation Law which provides that where shareholders have adopted a majority voting bylaw for corporate elections over the traditional plurality scheme, a corporation may not subsequently amend its bylaws to return to plurality voting without shareholder approval. This Article compares this provision to other approaches and explains the reasons underlying its adoption. It also briefly summarizes the evolving shareholder empowerment debate and analyzes the majority voting provision in the context of that discussion. The presence of activist shareholders will be an especially important phenomenon affecting this analysis. This Article then describes some unique and unanticipated interactions between majority voting bylaws and various other working parts of corporation and securities laws affecting the shareholder franchise. The most prevalent corporate strategies responding to this movement are explored and the difficulties of implementing majority voting are described. Finally, voting schemes from the political sphere are analyzed to find analogous lessons for the corporate arena, including exploring a runoff election proposal for corporate elections. The Article concludes with some predictions about future developments which will hinge on the outcome of SEC rules proposals, further DGCL revisions, New York Stock Exchange regulatory initiatives, and the responses from Delaware incorporated entities. This Article blends financial regulatory theory, interpretation of Delaware Court of Chancery cases, and practical analysis on the future of the majority voting movement and the strategic choices facing board of directors. The result is a developed framework for how majority voting could serve to alter significantly the balance of power between shareholders and board members.
- Subjects
DELAWARE; VOTING; CORPORATION law; BY-laws; STOCKHOLDERS; BOARDS of directors; DELAWARE. General Assembly
- Publication
Business Lawyer, 2007, Vol 62, Issue 3, p1007
- ISSN
0007-6899
- Publication type
Article