Tuesday, April 24, 2007
There has been some blog traffic here and here on the new North Dakota Publicly Traded Corporations Act (see North Dakota's press release trumpeting the Act here). Professor Ribstein has the latest and most extensive post today. Professor Ribstein aptly notes that the Act "looks like a shareholder rights advocate’s wish list."
With respect to takeovers, the Act permits shareholders of North Dakota public companies to ban poison pills, prohibits poison pills from being in effect for longer than the shorter of one year or 90 days after a majority of the shareholders indicate they wish to accept an offer, bans the ignominious dead-hand poison pill, and sets a minimum threshold for a poison pill trigger at 20%. In addition, all anti-takeover provisions in the articles or by-laws of a North Dakota publicly traded company must be approved by a 2/3rd vote of shareholders.
However, North Dakota companies need to affirmatively opt-in to the Act's provisions. There are currently two, count them, two, publicly traded companies organized under the laws of North Dakota. We'll see whether they decide to take the plunge. Furthermore, despite the Act's proclaimed intent to attract incorporations away from Delaware, for a host of reasons no-one thinks that this going to happen anytime soon. So, the Act is noteworthy more for attempting to set out in the market a referential shareholders bill of rights than anything else. With respect to the takeover provisions at least, it is a worthy goal.