The fund industry recently lost its second case on the use of control share bylaws, which seek to limit the ability of large shareholders to vote their shares after their holdings exceed a defined threshold.
The Delaware Court of Chancery, in an October 2021 opinion, held that a board wrongfully refused a stockholder demand because it was “reasonable to infer that the directors just did not care about complying with the legal requirements of Delaware law.” The decision is a reminder to directors that their fiduciary duties do not permit them to cursorily refuse a legitimate stockholder demand, and a reminder to investors that they have meaningful legal options if a board refuses to remedy clear corporate misconduct.
The most recent wave of mutual fund fee litigation is now over and investors should not be happy with the result. The wave consisted of 25 or so cases alleging that the fees charged by mutual fund advisers were excessive. While a handful settled, most were dismissed at various procedural stages by federal judges who couldn’t find an excessive fee in the entire lot.
On April 30, 2020, the Mutual Fund Directors Forum (“MFDF”) — an organization serving independent mutual fund directors — released a sort of “guidance” on the use of board minutes and notes. Their advice to directors may surprise you.