Friday, September 9, 2011
Although the collapse of the IPO market seems to have put an end to new adoptions of exclusive forum provisions in IPO charters, Davis Polk reports that several firms have begun trying to get exclusive forum charter amendment passed and with some success.
Seeking to strengthen their exclusive forum provisions against Galaviz-like challenges, several companies this year proposed exclusive forum charter provisions for shareholder approval, including three large-cap companies: Allstate, Altera and DIRECTV 4 The results so far have been mixed. At Altera and DIRECTV, the proposed amendments were approved by healthy majorities of the votes cast but only narrowly received the majorities of the outstanding shares (50.3% and 53.2%, respectively) required to adopt a charter amendment. At Allstate, however, the exclusive forum amendment was rejected by a majority of the votes cast and received the support of only 41.9 percent of the outstanding shares.
I've got a draft paper on the exclusive forum provision that will be coming out soon in the UC Davis Law Review in which I take up some reasons why I think these kinds of amendment aren't more prevalent.