Failure to reply to the company’s question before the deadline makes the nomination letter a failure: lessons for wannabe activists
The objective of this series is to discuss the hurdles faced by activist investors. This series is for activists and for wannabe activist investors.
Disclaimer: We are not lawyers and it is beyond the scope of this article to provide legal advice.
If you plan to send a nomination letter, you are required to send it before the “deadline”, which can be found in the by-law / proxy statement.
Even though Saba Capital sent the nomination letter before the deadline, BlackRock Muni New York Intermediate Duration Fund argued that Saba Capital failed to respond to the board’s further questions within the deadline. As such, the company rejected the nomination.
In March 2019, Saba Capital nominated six candidates to the board of BlackRock Muni New York Intermediate Duration Fund. The company rejected the nomination, citing that it failed to comply with the company’s by-law.
This is what occurred as per the company’s filing:
- Saba Capital sent a nomination letter to the company.
- The company’s board requested more detailed and verifiable information about each individual to confirm their qualifications.
- The company claims that Saba did not respond until after it was notified that it had missed the deadline.
Even though Saba Capital filed a lawsuit, the judge stated that Saba Capital failed to establish it was entitled to an injunction. Subsequently, Saba Capital withdrew the lawsuit.
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