June 25, 2019

June 25, 2019

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June 24, 2019

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How A Voting Shift Can Cut Short A Director's Term

Upon hearing that a "voting shift" has occurred, one might infer that there has been some change in the historical voting patterns.  The California General Corporation Law, however, defines the term very differently:

"'Voting shift' means a change, pursuant to or by operation of a provision of the articles, in the relative rights of the holders of one or more classes or series of shares, voting as one or more separate classes or series, to elect one or more directors."

Cal. Corp. Code § 194.7. 

The term, "voting shift", is found in one other statute within the GCL.  Section 301 generally provides that directors hold office until the expiration of the term to which they were elected and until a successor has been elected and qualified.  However, the articles of incorporation may provide that directors hold office for a shorter term to effectuate a voting shift.

For example, the articles may provide for the automatic termination of the term of office of one or more directors to allow for the election of a new director or directors by a class or series of shares as a result of a voting shift.

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...