January 19, 2006
The Corporate Laws Committee Report on Shareholder Voting
The Committee on Corporate Laws of the Section of Business Law of the American Bar Association, the body responsible for drafting the Model Business Corporation Act, has issued a report on shareholder voting. Report The Committee would not support default shareholder voting provisions that would require directors to be elected by a majority shareholder vote. It did however support a default bylaw provision that would allow either the board or the shareholders to amend a firm's bylaws to require a majority vote for directors. Currently such a change probably has to be in the articles (proposed by the board and ratified by shareholders). The change would enable shareholders (unless the articles prohibit it), on their own, to put in a majority vote system through a bylaw amendment. It is a sensible proposal and a good start. The problem is, of course, how a shareholder proponent may solicit proxies on the matter. The proposal should make clear the power of shareholders to access firm proxy solicitation materials on the issue.
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