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Activist can compel Delaware incorporated company to conduct AGM: Know your right
Disclaimer: This series is for activists and for wannabe activist investors. We are not lawyers and it is beyond the scope of this article to provide legal advice.
Under Delaware law, if a company fails to hold an AGM or take action by written consent to elect directors for a period of 13 months, any stockholder may petition the Court to compel that a meeting be conducted.
Blank check company
After TransTech Service Partners, a bank check company, failed to acquire a company within the stipulated time, one of its shareholders, Opportunity Partners, L.P. demanded that the company distribute the proceeds to shareholders. After the company refused to do so, Opportunity Partners filed a petition in the Delaware Court of Chancery to order TransTech to hold an annual meeting, at which shareholders could elect directors who would seek to make a prompt cash payout.
On April 14, 2009, the court ordered TransTech to hold this annual meeting.
Merger is not an excuse
In June 2013, Starboard filed a complaint requesting the Delaware Court to compel Office Depot to promptly hold its 2013 AGM.
Even though Office Depot had called a special meeting of shareholders for July 10, 2013 to vote on a proposed merger with OfficeMax, Starboard argued that this is not an excuse to skip an AGM.
Starboard argued that it is important to reconstitute the board, irrespective of the outcome of the merger, since the incumbent directors lacked retail experience.
In June 2013, the Delaware Chancery Court ordered Office Depot to hold its 2013 annual meeting on August 21, 2013.
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