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 .
Thursday, April 8, 2021
State corporate laws are surprisingly sparse on the details of annual meetings. The California Corporations Code, for example, requires that a corporation hold an annual meeting for the election of directors but does not detail who can or cannot attend that meeting. Cal. Corp. Code § 600(b). Given this legal lacuna, do shareholders have a right to attend meetings of shareholders and can corporations impose conditions upon attendance?
Many publicly traded companies do impose conditions upon attendance, including a requirement that the shareholder present photo identification. For example, The Coca Cola Company s proxy statement for its 2020 annual meeting imposed an ID requirement:
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State corporate laws are surprisingly sparse on the details of annual meetings. The California Corporations Code, for example, requires that a corporation hold an annual meeting for the election of directors but does not detail who can or cannot attend that meeting. Cal. Corp. Code § 600(b). Given this legal lacuna, do shareholders have a right to attend meetings of shareholders and can corporations impose conditions upon attendance?
Many publicly traded companies do impose conditions upon attendance, including a requirement that the shareholder present photo identification. For example, The Coca Cola Company s proxy statement for its 2020 annual meeting imposed an ID requirement:
To embed, copy and paste the code into your website or blog:
When parties consider an M&A transaction involving a merger, a factor that is top of mind for counsel is complying with the statutory appraisal procedures afforded to holders of equity in the merging entity who do not consent to the transaction – particularly where it is expected that a portion of the shareholder base will not approve of the transaction. Section 262 of the Delaware General Corporation Law protects shareholders of Delaware corporations who do not consent to a merger by providing for statutory appraisal rights, unless the shareholders have otherwise waived or “opted out” of these protections. Statutory appraisal rights entitle dissenting shareholders who comply with the statutory requirements to file a petition in the Delaware Court of Chancery demanding a determination of the fair value of their stock. Many other states, including California, New York, and Minnesota, have adopted statutes providing fo
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