Senate Bill S1387

                                BILL NUMBER:S1387

TITLE OF BILL:
An act
to amend the business corporation law, in relation to authorizing any
shareholder owning twenty percent or more of the issued shares to elect
that proportion of the directors which is equal to such shareholder's
ownership of corporate shares

PURPOSE OR GENERAL IDEA OF BILL:
Provides that any shareholder who
owns twenty percent or more of a corporation's shares shall be
entitled to elect its leadership.

SUMMARY OF SPECIFIC PROVISIONS:
This bill would amend section 618 the
business corporation law by adding a new subdivision that would allow
a holder of 20% or more of the shares of a corporation to require
board of directors to establish cumulative voting for the election of
directors of the corporation. The minority shareholder would be
required to petition for cumulative voting not less than 90 days
before a scheduled election of directors.

JUSTIFICATION:
It is the guiding principle of the United States, as
per the Bill of Rights, to provide within constitutional limitation,
              

for fair representation in all aspects of human endeavor. Exclusion,
isolation, and segregation in all walks of American life have been
addressed by all levels of the legislative and judicial systems in a
quest to eliminate and abolish the oppression that they manifest in
our society.

The concept of American Democracy is based on the rule of the majority
and that rule is regulated and tempered by the power of the
legislature that has been historically obligated to protect the
rights and interests of the minority.

In a corporation, the majority also wins and normally there are no
additional structures to protect the minority. For example, if a
corporation has two owners and one has 51% of the shares and the
other 49% of the remaining outstanding shares, the owner holding 51 %
of shares can defeat the other owner in every vote, potentially,
without the knowledge of the minority shareholder. It is possible
that the minority shareholder would have no representation and no
position other than that of passive investor in the corporation and
thus be totally at the mercy of the majority shareholder.

Because a corporation does not provide the structures that make
protection of minority interests possible, it is important that the
NYS Legislature remedy this situation by establishing legal means for
the protection for corporate minority interests and to provide

shareholders
with a minimum of twenty percent (20%) legal interest the option of
cumulative voting that would allow such a shareholder to elect
proportionate board membership.

PRIOR LEGISLATIVE HISTORY:
2009-2010: Reported out of Corporations, Authorities & Commissions
2007-2008: Reported out of Corporations, Authorities & Commissions
2005-2006: Corporations, Authorities & Commissions

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.

EFFECTIVE DATE:
This act shall take effect on the first January next
succeeding the date on which it shall have become a law, and shall
apply to elections of directors occurring on or after such date.