Corporations Questions. Forum

[MoltenWings]

For actions that require majority shareholder vote (such as amending the charter), does this require majority vote of the outstanding shares, or majority of the quorum that is present at the meeting (either physically or by proxy)?

[deadpoetnsp]

For actions that require majority shareholder vote (such as amending the charter), does this require majority vote of the outstanding shares, or majority of the quorum that is present at the meeting (either physically or by proxy)?

Majority of present.

[GMVarun]

Majority of present.

Nope, this is wrong.

For "major" corporate decisions (amending the charter, target's decision to sell substantially all of its assets, entering into a merger agreement, dissolving the company), Delaware law provides the default rule that a a majority of shares entitled to vote must vote in favor of the decision. So a majority of all common stock must vote in favor of the proposal.

For all other decisions (other proposals), the standard Delaware rule is a majority of shares present must vote in favor of the bill. This would require only a majority of the quorum.

OP, the easiest way to tell is to go to the Delaware statute in question.

Whenever NYSE gives shareholders the right to vote, and Delaware law does not, NYSE only requires a majority of shares present to vote in favor of the decision.

[Geist13]

Majority of present.

Nope, this is wrong.

For "major" corporate decisions (amending the charter, target's decision to sell substantially all of its assets, entering into a merger agreement, dissolving the company), Delaware law provides the default rule that a a majority of shares entitled to vote must vote in favor of the decision. So a majority of all common stock must vote in favor of the proposal.

For all other decisions (other proposals), the standard Delaware rule is a majority of shares present must vote in favor of the bill. This would require only a majority of the quorum.

OP, the easiest way to tell is to go to the Delaware statute in question.

Whenever NYSE gives shareholders the right to vote, and Delaware law does not, NYSE only requires a majority of shares present to vote in favor of the decision.

Could you clarify which Delaware rule provides for different voting requirement for major decisions and how one distinguishes a major from a minor decision? Its sure not anywhere in my notes. I just have 141(b), quorum=majority of those eligible, action requires majority of those present.

[GMVarun]

Could you clarify which Delaware rule provides for different voting requirement for major decisions and how one distinguishes a major from a minor decision? Its sure not anywhere in my notes. I just have 141(b), quorum=majority of those eligible, action requires majority of those present.

Sure. I think the language Delaware Courts use is actions that are "fundamental" corporate changes. A way to think about this is that any of these changes the nature of the principal-agency relationship in a way that other, typical corporate changes do not. I am not sure there really is a principled distinction -- the Delaware legislature just thinks in these circumstances all shareholders should have the right to vote (as their property right in their investment will likely be 'substantially' different after the change). As far as I know, it is only the ones I have listed.

Merger agreements: DGCL § 251(c) ("The agreement required by subsection (b) of this section shall be submitted to the stockholders of each constituent corporation at an annual or special meeting for the purpose of acting on the agreement. At the meeting, the agreement shall be considered and a vote taken for its adoption or rejection. If a majority of the outstanding stock of the corporation entitled to vote thereon shall be voted for the adoption of the agreement, that fact shall be certified on the agreement by the secretary or assistant secretary of the corporation, provided that such certification on the agreement shall not be required if a certificate of merger or consolidation is filed in lieu of filing the agreement.").
Sale of all or substantially all of a corporation's assets: DGCL § 271(a).
Dissolution of corporation: DGCL § 275(a).
Amending charter: DGCL § 242.