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Proxy Rules Do Not Allow Management to Bundle Major Proposals into One Vote
Description Corporate proxy vote that bundled three major proposals into one voting item was held to violate SEC anti-bundling rules. Shareholder objection to the proposal bundling by management may proceed.
Topic Securities Law
Key Words Proxy Statement; Bundling
C A S E   S U M M A R Y
Facts A corporation that owned and managed real estate was in financial difficulty. Shareholders were asked to approve restructuring of the company, which involved three major proposals that were bundled into one item on a proxy statement. A dissenting shareholder sued, claiming that under the 14(a) of the Exchange Act, each proposal was a matter to be voted upon separately by the shareholders. District court rejected this contention; shareholder appealed.
Decision Reversed. SEC rules are specifically intended to "unbundle management proposals." While one matter that shareholders vote upon may depend on passage of another proposal being voted upon, "the rules require unbendingly that the proposals remain as separate voting items on the proxy." There is a preference for more voting items rather than fewer.
Citation Koppel v. 4987 Corporation, - F.3d - (1999 WL 51885, 2nd Cir.)

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