Hartman Revocable Living Trust v. S. Mich. Bancorp, Inc.

Whenever a Michigan corporation holds a shareholder meeting, it must disclose any proposals on the agenda that a shareholder wishes to submit for shareholder action. In 2012, one of Bancorp’s shareholders asked the company to circulate such a proposal before the company’s 2013 annual meeting. The proposal called for “director accountability” in amending Bancorp’s bylaws, which did not permit the corporation to claw back fees paid to directors found liable for breaching their fiduciary duties. In its proxy statement discussing the agenda, Bancorp neither distributed the proposal nor described it, stating only that a shareholder planned to propose a resolution urging the board to amend the bylaws and that, If that resolution materialized, the directors would use their “discretionary authority” to vote it down by treating all submitted proxies as no-votes absent instructions to the contrary. After the proposal was voted down at the meeting, the shareholder sued. The district court dismissed. The Sixth Circuit reversed, finding that the “notice” did not satisfy Mich. Comp. Laws 450.1404. Mere acknowledgement of the existence of a proposal, without describing even its subject matter, cannot amounts to “notice” under the statute. View "Hartman Revocable Living Trust v. S. Mich. Bancorp, Inc." on Justia Law