senate Bill S1270

2013-2014 Legislative Session

Provides that any shareholder who owns 20% or more of a corporation's shares shall be entitled to elect a proportional share of the board of directors

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to corporations, authorities and commissions
Jan 09, 2013 referred to corporations, authorities and commissions

S1270 - Bill Details

Current Committee:
Law Section:
Business Corporation Law
Laws Affected:
Amd ยง618, BC L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S1387
2009-2010: S5008

S1270 - Bill Texts

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Provides that any shareholder who owns 20% or more of a corporation's shares shall be entitled to elect a proportional share of the board of directors.

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BILL NUMBER:S1270

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:
2011-2012: Referred to Corporations, Authorities & Commissions
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.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  1270

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  Sen. PERKINS -- read twice and ordered printed, and when
  printed to be committed to the Committee on Corporations,  Authorities
  and Commissions

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  share-
  holder's ownership of corporate shares

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 618 of the business corporation law is  amended  to
read as follows:
S 618. Cumulative voting.
  (A)  The  certificate  of incorporation of any corporation may provide
that in all elections of directors of such corporation each  shareholder
shall  be  entitled  to as many votes as shall equal the number of votes
which, except for such provisions as to cumulative  voting,  he  OR  SHE
would  be entitled to cast for the election of directors with respect to
his OR HER shares multiplied by the number of directors to  be  elected,
and  that  he OR SHE may cast all of such votes for a single director or
may distribute them among the number to be voted for, or any two or more
of them, as he OR SHE may see fit, which right, when exercised, shall be
termed cumulative voting.
  (B) IF ANY SHAREHOLDER WHO OWNS TWENTY PERCENT OR MORE OF  THE  ISSUED
AND  OUTSTANDING  SHARES  OF ANY CORPORATION SHALL PETITION THE BOARD OF
DIRECTORS OF SUCH CORPORATION TO CAUSE THE ARTICLES OF INCORPORATION  OF
SUCH  CORPORATION  TO  BE  AMENDED  TO  PROVIDE FOR CUMULATIVE VOTING AS
PROVIDED IN PARAGRAPH (A) OF THIS SECTION, THE BOARD OF DIRECTORS  SHALL
PROMPTLY  CAUSE  SUCH  ARTICLES OF INCORPORATION TO BE SO AMENDED BEFORE
THE NEXT SCHEDULED MEETING OF SHAREHOLDERS FOR THE PURPOSE  OF  ELECTING

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02698-01-3

S. 1270                             2

DIRECTORS, UNLESS SUCH NEXT MEETING WAS SCHEDULED AND NOTICED TO BE HELD
LESS THAN NINETY DAYS FROM THE DATE OF SUCH SHAREHOLDER PETITION.
  S  2. This act shall take effect on the first of January next succeed-
ing the date on which it shall have become a law,  and  shall  apply  to
elections of directors occurring on or after such date.

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