Page 148 - מיזוגים ורכישות - פרופ' אהוד קמר 2022
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shareholders voted to expand the board to 11 persons. The shareholders had the
opportunity, as I stated before, to elect MM’s nominees to a majority of an expanded
board or to a minority of the current smaller-size board. The shareholders chose to elect
the latter; that is, to elect two MM nominees to the current board. The expansion of the
current board from five to seven on August 21st did nothing to interfere with or to change
the two voting options that the shareholders had.
In so finding, the Chancery Court refused to follow IBS Fin. Corp. v. Seidman &
Assocs., L.L.C.,10 where the court found that a change in the size of the board in response
to a dissident election did invoke the Blasius standard. The court had noted that Blasius
would apply if the effect of the board action were to deprive the dissident of the
opportunity to obtain a "substantial presence on the board.” The Court of Chancery
rejected this test as "somewhat vague.” The court also pointed out that in the IBS case,
the board action (a reduction in the number of seats on the board) could have forced the
dissident to go through three annual meetings to elect a new board majority, rather than
two.
The Chancery Court distinguished the facts before it: "In this case, in contrast,
there is no such impact, because the shareholders will be entitled to elect at the next
annual meeting another class of directors.”
Accordingly, the court found, "the board action in this case had no impact on the
shareholder vote. . . .” Thus, the court found that the only stockholder action at issue
was the election of two directors (and not the election of a majority), and that the
stockholders’ ability to elect such directors was not impeded by the board increase.
The court went on to rule that the board action also satisfied the Unocal standard
because the defensive measures were neither preclusive nor coercive, and were
reasonable in relation to the threat posed. In so ruling, the court again focused on the
fact that the board response did not affect the ability of the insurgent to gain control of
the board:
Nor has any persuasive showing been made that the action that the board
took falls outside a range of reasonable responses. The board action did
10 136 F.3d 940 (3d Cir. 1998).
144
opportunity, as I stated before, to elect MM’s nominees to a majority of an expanded
board or to a minority of the current smaller-size board. The shareholders chose to elect
the latter; that is, to elect two MM nominees to the current board. The expansion of the
current board from five to seven on August 21st did nothing to interfere with or to change
the two voting options that the shareholders had.
In so finding, the Chancery Court refused to follow IBS Fin. Corp. v. Seidman &
Assocs., L.L.C.,10 where the court found that a change in the size of the board in response
to a dissident election did invoke the Blasius standard. The court had noted that Blasius
would apply if the effect of the board action were to deprive the dissident of the
opportunity to obtain a "substantial presence on the board.” The Court of Chancery
rejected this test as "somewhat vague.” The court also pointed out that in the IBS case,
the board action (a reduction in the number of seats on the board) could have forced the
dissident to go through three annual meetings to elect a new board majority, rather than
two.
The Chancery Court distinguished the facts before it: "In this case, in contrast,
there is no such impact, because the shareholders will be entitled to elect at the next
annual meeting another class of directors.”
Accordingly, the court found, "the board action in this case had no impact on the
shareholder vote. . . .” Thus, the court found that the only stockholder action at issue
was the election of two directors (and not the election of a majority), and that the
stockholders’ ability to elect such directors was not impeded by the board increase.
The court went on to rule that the board action also satisfied the Unocal standard
because the defensive measures were neither preclusive nor coercive, and were
reasonable in relation to the threat posed. In so ruling, the court again focused on the
fact that the board response did not affect the ability of the insurgent to gain control of
the board:
Nor has any persuasive showing been made that the action that the board
took falls outside a range of reasonable responses. The board action did
10 136 F.3d 940 (3d Cir. 1998).
144
