BISMARCK, N.D., April 12 /PRNewswire-USNewswire/ -- The first
shareholder friendly corporation law in the United States has been signed
into law by John Hoeven, the Governor of North Dakota. The new law provides
a governance structure for publicly traded corporations that gives
shareholders greater rights than they currently have under other state
laws. It has been designed to reflect the best thinking of institutional
investors and governance experts and addresses each of the current hot
topics in corporate governance.
The new law is optional and will be available for corporations
incorporated under North Dakota law after July 1, 2007 that elect to be
subject to the new law by including a provision to that effect in their
articles of incorporation.
One of the principal supporters of the legislation was the Secretary of
State of North Dakota, Al Jaeger, who testified several times at
legislative hearings in support of the new law. Secretary Jaeger commented,
"I like the new law because it provides an option for publicly traded
corporations. Either they can incorporate in North Dakota under traditional
corporate law, or they can incorporate under this new system of corporate
governance which is designed to be more responsive to the shareholders, who
are the owners of the company. In our state, they will have a clear
choice."
The Insurance Commissioner of North Dakota, Jim Poolman, also testified
in support of the legislation. Commissioner Poolman stated, "My experience
as Insurance Commissioner and as a member of our State Investment Board has
given me an appreciation for the importance of corporate governance and the
direct correlation between improved governance and improved performance. I
believe the new law is an important step forward for our economy and the
health of our securities markets."
Among the significant provisions of the new law are the following:
-- Majority voting in election of directors. In an uncontested election
of directors, shareholders have the right to vote "yes" or "no" on each
candidate, and only those candidates receiving a majority of "yes"
votes are elected.
-- Advisory shareholder votes on compensation reports. The compensation
committee of the board of directors must report to the shareholders at
each annual meeting of shareholders and the shareholders have an
advisory vote on whether they accept the report of the committee.
-- Proxy access. The corporation must include in its proxy statement
nominees proposed by 5% shareholders who have held their shares for at
least two years.
-- Reimbursement for successful proxy contests. The corporation must
reimburse shareholders who conduct a proxy contest to the extent the
shareholders are successful. Thus, if a shareholder conducts a proxy
contest to place three directors on a corporation's board and two of
the candidates are elected, the shareholder will be entitled to
reimbursement of two-thirds of the cost of the proxy contest.
-- Separation of roles of Chair and CEO. The board of directors must have
a chair who is not an executive officer of the corporation.
The legislation was introduced as House Bill 1340 and the new law can
be found as Chapter 10-35 of the North Dakota Century Code. The text of the
law is available at
http://www.legis.nd.gov/assembly/60-2007/bill-index/bi1340.html
The North Dakota Corporate Governance Council is a nonprofit
corporation organized to support enactment of the new law and to advance
the discussion of shareholder rights in publicly traded corporations. Its
current board of directors consists of William H. Clark, Jr., William
Sorensen, and Steven Herman. Mr. Clark drafted the new law and is a partner
in the national law firm of Drinker Biddle & Reath LLP. Mr. Sorensen is the
former mayor of Bismarck, ND, and is the President of Business Information
Systems Incorporated, a telecommunications and computer services company
serving the Midwest. Mr. Herman is the CEO of AAction Moving, with offices
throughout the Midwest, and the treasurer of Unigroup, Inc., the parent
company of United Van Lines.
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SOURCE North Dakota Corporate Governance Council
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CONTACT:
William H. Clark, Jr., President of the North
Dakota Corporate Governance Council, Direct: +1-215-988-2804,
Fax: +1-267-402-4629, william.clark@dbr.com
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