18 Mar. 2011 | Comments (0)
- Consider drafting shareholder rights plans so that they satisfy standards of acceptability set by the most influential proxy voting advisors such as ISS while also taking into account such issues as derivative voting positions and net operating losses (NOL), which can be a valuable corporate asset until there is an ownership change.
- Consider having management maintain a thoughtful business plan for the corporation that the board understands and has approved.
- Consider abstaining from certain defensive tactics, such as introducing supermajority voting requirements or disallowing action by written consent or limiting the ability to call special meetings.
- Consider adopting advance notice bylaws so that directors can avail themselves of enough time to obtain the information necessary to make a rational business decision about the acquisition or merger offer.
“Chancellor Chandler stated that he would have preferred to let shareholders make the choice at this stage, as they ‘know what they need to know . . . to make an informed decision.’ But he felt that denying shareholders' right to choose was required by previous Delaware cases, which recognized directors' right to block offers out of concern that shareholders would accept them ‘in ignorance or a mistaken belief’ concerning the value of remaining independent.”Meanwhile, The Conference Board Governance Center will continue to provide guidance to public companies facing activist shareholders through its Director Notes series and the Shareholder Activism Report and Resource Portal, which was launched in April 2010 in collaboration with the following professional leaders in the field: Debevoise & Plimpton LLP; Egon Zehnder International; Georgeson Inc.; Hedge Fund Solutions, LLC; Innisfree M&A Incorporated; Joele Frank, Wilkinson Brimmer Katcher; MacKenzie Partners, Inc.; Sard Verbinnen & Co; Sullivan & Cromwell LLP; and Wachtell, Lipton, Rosen & Katz.