Corporate Governance

Delaware to Decide on Proxy Proposal

By Fei-Lu Qian

With more than 60% of U.S. companies being incorporated in Delaware, the state?s legislature established a procedure last year where the Securities and Exchange Commission is able to get direct access to Delaware?s highest court and requests rulings on various state legal matters such as whether shareholder proposals comply with the state?s law. As such, the Delaware Supreme Court has just agreed to entertain a question concerning a shareholder proposal where a company would need to reimburse a shareholder reasonable expenses who successfully wages a proxy fight in getting at least one board seat.

Originally, CA Inc. asked the SEC for permission to omit the proposal submitted by the American Federal of State, County and Municipal Employees from its annual proxy statement on the basis that such an amendment to its bylaws would cause the company to violate Delaware law because decisions on spending are traditionally decided by the company and its directors, not shareholders. Instead of providing guidance, the SEC referred the question to the Delaware Supreme Court. The state?s highest court has put the issue on fast track and instructed the parties to submit briefs by July 7 and present oral arguments two days later.

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Full post as published by PomTalk on July 02, 2008 (boomark / email).