Academic

Yesterday, the Delaware Supreme Court agreed to accept questions certified to it by the SEC, marking the Court's first use of the law enacted last year enabling the Delaware Supreme Court to accept such certified questions.  Thus far, the process itself has been interesting.  Indeed, the SEC certified its questions on Friday, emphasizing the need for timeliness since the issues relate to proxy materials being sent on July 17.  And the Delaware Supreme Court responded, not only quickly accepting the certified questions, but also setting a very fast timeline.  Thus, briefs are due July 7 and oral arguments are scheduled July 9.

Of course, the substance of the certification is even more interesting, as they revolve around unsettled questions of Delaware law.  Thus, the AFSCME Employees Pension Plan submitted a shareholder proposal for inclusion in Ca, Inc's proxy statement seeking to amend CA's by-laws and require that the company reimburse the reasonable expenses of a stockholder or group stockholders who run a short slate of director candidates so long as one of their nominees is elected to the board.  CA sought a no-action letter seeking to exclude the proposal based in part on the grounds that the proposal was not a proper subject under Delaware law, and if adopted would cause the company to violate Delaware law.  Confronted with conflicting opinions on Delaware law in this area from two Delaware law firms, the SEC's Division of Corporate Finance indicated that it did not resolve issues surrounding disputed questions of law, and hence requested the SEC to make the certification.

The certified questions: (1) Is the AFSCME Proposal a proper subject for shareholders as a matter of Delaware Law?; (2) Would the AFSCME Proposal, if adopted, cause CA to violate any Delaware Law to which it is subject?

Certainly the responses to those questions should have an important impact on Delaware Law and shareholder activism.  Luckily, we do not have long to wait for their resolution.