Michael M. Wechsler

St. Johns University School of Law Corporations Law Outline

Corporations Law Outline, 94 pages, detailed, covers general and New York law.

  1. Michael M. Wechsler
    Professor Name:
    William Harrington
    Class Year:
    1996
    Law Outline: General corporations law and also coverage of New York corporations law and GBL. 94 pages in Microsoft Word format.

    I. Scope of Coverage of Proxy Rules

    Proxy Rules - solicitations by management or anyone else
    • §14(a) requires that the SEC promulgate rules regarding the solicitation of proxies and have done so in this section.

    Chicagoans: should stop thinking of SH as owners - individuals should just be seeking a diversified portfolio -- proxy system is a waste of time

    Problems
    - machinery is cumbersome agenda is in the hands of management collective actions problems associated w/ getting a large group to act cohesively, SH lacks control, leadership, etc

    NY state on proxies - § 609
    • mandatory usage - corp cannot do away with proxies in the Certificate of Incorporation (no COA case).
    • to have a valid proxy in NY must be a signed writing which satisfies the SOF
    expiration date - proxy invalidated in 11 months unless extended by its terms
    incompetents/death of principle SH does NOT revoke the agency unless the corp receives notice before the vote

    pledgor/pledgee
    HYPO: H owns 100 shares of AMCAT - B lends H money so H pledges shares as security --- who gets to vote share?

    NY: the pledgor (H) is entitled to vote absent an agreement to the otherwise - even if record title is put in B's name for security reasons, H (pledgor) is entitled to proxy b/c he is still the owner.

    revocability rules: proxy are revocable at the will of the SH
    • SH can show up at meetings
    • SH can issue a new proxy which as a matter of law revokes the proxy

    § 609(e): makes it illegal to sell votes except if a sale is deemed in connection w/ the exceptions of the rules that proxies are revocable.

    exceptions to revocability: (NOT equivalent to selling votes)
    (except for 5 exception cannot K around revocability)

    (1) pledgee: legitimate interest in shares, can have an irrevocable pledge given to the pledgee
    i.e.: if B lends H $, can validly make an agreement that the proxies are irrevocable
    (2) buyer's of the shares: if buy shares after the record date, corp will only look to SH as to record name ==> buyer can insist on irrevocable proxy to ensure that he will be able to vote the shares he purchased.
    (3) creditors of the corp for consideration: bank makes loan to corp as part of deal and insists that largest SH gives proxies to the bank so can control the BOD until the loan is paid (rarely done)
    (4) officers of the corp under K: turn around artists for hurting corp insist on K in addition to fees, to gain control of the corp by irrevocable proxies
    (5) proxies given in connection w/ valid SH K -- § 620(k): allows SH to pool their votes and agree to vote the same way or be bound by the majority -- proxies are given to an agent to make sure everyone agrees to do what promised to do

    NOTE: irrevocability: is not meant literally - it becomes revocable when pledge is redeemed or debt is repaid or officers employment ends or voting agreement ends

    NOTE: w/ a validly irrevocable proxy, purchaser w/o knowledge or notice can revoke the proxy -- NOTICE: proxy must be conspicuously noted ont he front/back of the stock certificate and a sentence stating it is an irrevocable proxy