May The Board Let The CEO Decide To Sell The Company? Thursday, April 15, 2021
Professor Stephen Bainbridge recently addressed the question of whether a board of directors could delegate to the CEO the decision about when and whether to sell the company. Professor Bainbridge points out that the CEO is an agent of the corporation and a board can vest authority in the corporation s agents.
As a question of agency law, I agree that a board could delegate to the CEO decisions as to when, whether and on what terms the corporation could be sold. However, Section 300 of the California Corporations Code provides that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the board . Thus, it is possible that a court would conclude that a grant of unfettered discretion would constitute an abdication of the ultimate direction of the board .
Whether it is feasible under state law to provide alternative means for shareholders to present their proposals begs the question of whether state law requires shareholder to appear and present their proposal at the meeting?
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Lynn Jokela at TheCorporateCounsel.net blog took note yesterday of recently updated guidance from the SEC s Division of Corporation Finance concerning the conduct of shareholder meetings in light of the Covid-19 pandemic. Among other things, the guidance observes: Exchange Act Rule 14a-8(h) requires shareholder proponents, or their representatives, to appear and present their proposals at the annual meeting. In light of the possible difficulties for shareholder proponents to attend annual meetings in person to present their proposals, the staff encourages issuers, to the extent feasible under state law, to provide shareholder proponents or their representatives with the ability to present their proposals through alternative means, such as by phone, during the 2020 and 2021 proxy seasons.
Bespoke Capital Acquisition Corp Business Securities Merger/Acquisition Registration S-4 sec.report - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from sec.report Daily Mail and Mail on Sunday newspapers.
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The California General Corporation Law authorizes a corporation (Section 162) to convert into a domestic other business entity (Section 167.7). The GCL, however, does not permit a corporation to convert to a foreign other business entity (Section 171.07). The Corporations Committee of the Business Law Section of the California Lawyers Association would like to see that change and has sponsored legislation, SB 288 (Jones), to make that happen. This is a repeat of an effort that began last year but that was placed on hold with the onset of the Covid-19 pandemic.