Eric Talley at Berkeley, and the Berkeley Business Law Journal, put together a great conference on April 4, 2014 on shareholder activism, and I scratched out the following thoughts for our panel. We were supposed to talk about the prospects for further regulatory and legal developments governing or motivating shareholder activism. First, though, consider what legal rules facilitate activism – and when you do that, you discover that any change is likely to be marginal at best. Given my working definition of shareholder activism – using share ownership to promote concerted action, by large numbers of shareholders, to exercise the legal rights of shares – the following are key legal rules that enable this to occur.
- Putting aside the unusual case of dual class capital structures, stockholders will have one vote per share;
- They will be entitled to vote on the election of directors at annual meetings;
- They will be entitled to vote on mergers and, at least in Delaware, those transactions will require approval from a majority of the outstanding shares – and maybe even a majority of public or minority shares, in the case of a going private transaction;
- Putting aside the currently unusual situation of a stock for stock deal, stockholders will have the right to seek a judicial appraisal of their shares.
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