Corporate Governance

As Predicted: The SEC and the Further Denial of Shareholder Access (The Actual Result) (Part 20)

By J. Robert Brown

The Delaware Supreme Court all but admitted its bias but professed to have no choice.  As the opinion noted: 

• In arriving at this conclusion, we express no view on whether the Bylaw as currently drafted, would create a better governance scheme from a policy standpoint. We decide only what is, and is not, legally permitted under the DGCL. That statute, as currently drafted, is the expression of policy as decreed by the Delaware legislature. Those who believe that CA’s shareholders should be permitted to make the proposed Bylaw as drafted part of CA’s governance scheme, have two alternatives. They may seek to amend the Certificate of Incorporation to include the substance of the Bylaw; or they may seek recourse from the Delaware General Assembly.  

In other words, the Court recognized that the opinion might well be bad policy and bad governance but asserted that its hands were tied and recourse would need to be to the legislature.  Its hands were not tied.  The opinion ultimately found that the language of the relevant statutes did not control and instead relied entirely on principals of common law.  In other words, the Court could easily have come out the other way.  Instead, the Court sought to blame the legislature for a state of affairs that it created. 

The opinion is posted on the DU Corporate Governance web site.

Full post as published by The Race to the Bottom on July 18, 2008 (boomark / email).