Kurz v. Holbrook: Shareholder Voting, Omnibus Proxies, and the Role of DTC: Amending the Articles

We are discussing Kurz v. Holbrook, 2010 Del. Ch. LEXIS 24 (Del. Ch. Feb. 9, 2010).

In many ways, this is an unusual case.  Certainly, bylaws designed to reduce board size between meetings are not common.  Moreover, while VC Laster made his view clear, that these bylaws are invalid, any uncertainly left over by the case may require companies to address the issue more explicitedly.  Some already have.  Thus, for example, the articles at Lockheed Martin include the following language:  "However, no decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director."  This type of language is quite common and appears in hundreds if not thousands of constituent documents of public companies.   

For more on the entire system of beneficial ownership and the role of the depositories, see The Shareholder Communication Rules and the Securities and Exchange Commission: An Exercise in Regulatory Utility or Futility?

The opinion and a number of primary materials are posted at the DU Corporate Governance web site.