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Note: Since many of the articles reporting on the progress of the demonstration case initiated by Professor Bebchuk are unclear about what issues might be resolved, interested readers are encouraged to refer to the court's very careful explanation of what is considered open and what has been previously established in Delaware decisions.  In summary, the issues actually raised in this case concern only specific applications of poison pills.  The court confirmed the absence of any question about the broader rights of shareholders to submit binding proposals to amend bylaws, and also reiterated the previously established Delaware court position that the SEC should in most cases allow shareholders to vote on proposals involving unresolved state law issues.  The decision can be downloaded from the following link:

 

The Wall Street Journal  

June 27, 2006 11:56 a.m. EDT

 
 

CA Inc. To Add Proposal Bounced By Courts To July Proxy


DOW JONES NEWSWIRES
June 27, 2006 11:56 a.m.
 
   By Kaja Whitehouse 
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--CA Inc. (CA) said it will add to its July proxy a shareholder proposal that seeks to change the company's bylaws after a Delaware court refused to rule on the company's original decision to reject the proposal.

The Islandia, N.Y., technology company originally said no to adding the proposal to its upcoming proxy statement, claiming that the proposal was a violation of Delaware law. The rejection resulted in a court challenge by the drafter of the resolution, Harvard-professor-turned-shareholder-rights-activist Lucian Bebchuk.

Last week, a Delaware judge refused to rule on the legality of CA's decision to reject the proposal, saying the issue wasn't "ripe" for a decision.

A ruling by the courts would have shed light on the currently murky issue of whether shareholders have the power to decide bylaw issues, which are normally governed by directors. As part of a growing effort by shareholders to gain more control over how public companies are governed, more shareholders are looking to submit proposals that would be binding in companies' bylaws.

This lack of clarity from the court system, which indicates that Delaware judiciaries feel shareholders could have a right to change a company's bylaws, prompted CA's change of heart about the proposal.

"The Delaware Court has ruled that it should not decide the legality of the bylaw until our stockholders have first voted on it," said Jennifer Hallahan, a spokeswoman for the company.

CA shareholders will be able to vote on the resolution, which seeks to limit the company's poison-pill provisions, at the shareholders' annual meeting, which is scheduled for late August.
  URL for this article:
http://online.wsj.com/article/BT_CO_20060627_707990.html

 
   
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