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Forum Report
Requirements of Proving
Stock Ownership Rights
Addressing the interest of some Forum participants in "proxy plumbing"
issues raised in an Apache Corporation lawsuit
to block a shareholder proposal submitted by the activist John Chevedden,
the federal court has rejected Apache's arguments about complicated
requirements to prove stock ownership but determined that Chevedden's
proposal could be excluded based on his delayed response to the request for
proof. The decision, like a recently
reported Delaware court ruling that reached essentially the same
conclusions about practical ownership proof, provides a useful review of the
evolution and current state of processes for maintaining stock records:
The court's position seemed to be effectively summarized in its citation of
the following SEC statement, from a 1999 case supporting a shareholder's
response to a corporate manager's challenge (page 24):
“Beneficial owners generally have a relationship with their broker or bank;
requiring investors to obtain a letter from an agent of their broker or bank
would needlessly complicate the process and encourage the sort of petty
games-playing in which [the issuer company] is engaging here.”
I will welcome your comments about how this case may influence the
investor communication processes or issues being addressed in Forum
programs.
GL – March
15, 2010
Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212-605-0335
Email: gl@shareholderforum.com
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