The WBCL at 25

Kenneth B. Davis, Jr.

Of Counsel
Reinhart Boerner Van Deuren s.c.
kdavis@reinhartlaw.com / 608 229-2270
George H. Young Chair in Law & Dean Emeritus
Unuversity of Wisconsin Law School
kbdavis@wisc.edu / 608 262-0962

Milwaukee, Wisconsin
February 19, 2015
 U.S. Reincorporations (1991-2000)
166 Reincorporations:
California (84), New York (11),
Texas (9), Colorado (7),
Massachusetts (5), Other (50)
Delaware
105 Reincorporations:
Wisconsin (14), 76 Reincorporations:
Florida (10), Ohio (9), California (19), Texas (10),
Washington (8), Florida (8), Other (39)
Minnesota (8), Other (56).

Headquarters
37 Reincorporations:
Georgia (5), Florida (4),
Pennsylvania (2), Other
(26)

35 Reincorporations:
California (6), New York (5),
Texas (5), Other (19)

18 Reincorporations: Other
California (2), Colorado
(2), New York (2),
Pennsylvania (2), Other
(10)

From: Guhan Subramanian, The Influence of Antitakeover Statutes on Incorporation Choice: Evidence
on the Race Debate and Antitakeover Overreaching, 150 U. Penn. L. Rev. 1795, Figure 6 (2002)
2
 Foreign Corporations & Internal
Affairs
Joncas v. Krueger, 213 N.W.2d 1 (Wis. 1973) Wisconsin
shareholder liability statute applies to Delaware
corporation
Wis. Stat 180.1505(3) This chapter does not authorize
this state to regulate the organization or internal affairs of
a foreign corporation authorized to transact business in
this state.
Wis. Stat. 180.1704 Except as provided in s. 180.1708,
this chapter applies to all foreign corporations transacting
business in this state on or after January 1, 1991.
Beloit Liquidating Trust v. Grade, 677 N.W.2d 298 (Wis.
2004) Directors fiduciary duty to creditors of Delaware
corporation governed by Wisconsin law
 Corporate
Governance
&
Institutional Investors
 Bylaws
CA, Inc. v. AFSCME Employees Pension Plan, 953 A.2d
227 (Del. 2008) Shareholder-proposed bylaw requiring
reimbursement of expenses incurred in nominating
director candidates; held to be proper subject for
stockholder action, but inconsistent with law
Boilermakers Local 154 Retirement Fund v. Chevron
Corp., 73 A.3d 934 (Del. Ch. 2008) Upholding
exclusive forum bylaw
ATP Tour, Inc. v. Deutscher Tennis Bund, 91 A.3d 554
(Del. 2014) Upholding bylaw of non-stock corporation
that requires losing plaintiff to reimburse corporations
litigation expenses
 Bylaws
Wis. Stat. 180.0206(2) The bylaws of a corporation
may contain any provision for managing the business
and regulating the affairs of the corporation that is
not inconsistent with its articles of incorporation or
with the laws of this state.

Del. Gen. Corp. Law 109(b) The bylaws may

contain any provision, not inconsistent with law or
with the certificate of incorporation, relating to the
business of the corporation, the conduct of its affairs,
and its rights or powers or the rights or powers of its
stockholders, directors, officers or employees.
 Majority Voting
Wis. Stat. 180.0728(1) Unless otherwise
provided in the articles of incorporation,
directors are elected by a plurality of the
votes cast by the shares entitled to vote in
the election at a meeting at which a
quorum is present.
Del General Corp Law 141(b), 216 final
Irrevocable resignation
Model Business Corp Act 8.05(b),
10.22(a)(2) Term expires; no holding over
 Reincorporation Proposals
Chesapeake Energy Corp Oklahoma to Delaware
2.71% support in 2013
53.27% support in 2012
ITT Corp Indiana to Delaware
3.35% support in 2012
Wellpoint, Inc. Indiana to Delaware
34.5% support in 2011
38.35% support in 2010
2010 3 proposals to reincorporate in North
Dakota
Oshkosh Corp Wisconsin to North Dakota
4.46% support in 2009
 Reincorporation Proposals
ISS General Recommendation: Management
or shareholder proposals to change a companys state
of incorporation should be evaluated case-by-case,
giving consideration to both financial and corporate
governance concerns including the following:
Reasons for reincorporation;
Comparison of companys governance practices and
provisions prior to and following the reincorporation; and
Comparison of corporation laws of original state and
destination state.
Vote for reincorporation when the economic factors
outweigh any neutral or negative governance changes.
 Mergers
&
Acquisitions
Mergers & Acquisitions

Shareholder Litigation Involving Mergers and Acquisitions

Cornerstone Research 2014
 Mergers & Acquisitions
Takeover Defense
Wisconsin
Fair Price Wis. Stat. 180.1130 to .1134
Business Combination Wis. Stat. 180.1140
to .1144
Control Share Acquisition Wis. Stat.
180.1150
Delaware
Weaker Version of Business Combination
DGCL 203
 Mergers & Acquisitions
Mergers with Controlling Shareholders
Delaware
Entire Fairness Kahn v. M&F Worldwide Corp., 88 A.3d
635 (Del. 2014); Kahn v. Lynch Communication Systems,
Inc., 638 A.2d 1110 (Del. 1994); Weinberger v. UOP, Inc.,
457 A.2d 701 (Del. 1983)
Wisconsin
Wis. Stat. 180.1302(5) Shareholder may not challenge
corporate action unless the action is unlawful or
fraudulent; otherwise exclusive remedy is appraisal
HMO-W Inc. v. SSM Health Care System, 611 N.W.2d 250,
259 (Wis. 2000); Pritchard v. Mead, 455 N.W.2d 263, 266
(Wis. Ct. Apps. 1990) (Inadequacy of price in and of itself,
however, does not constitute fraud or illegality.)
 Mergers & Acquisitions
Friendly Mergers
Delaware
Revlon, Inc. v. MacAndrews & Forbes Holdings,
Inc., 506 A.2d 173, 182 (Del. 1986) Board must
obtain maximum value for stockholders
Wisconsin
Wis. Stat. 180.0827 - Board may consider non-
shareholder interests, such as employees or
customers
Dixon v. Ladish Co., 785 F. Supp. 2d 746, 752 (E.D.
Wis. 2011), affd, 667 F.3d 891 (7th Cir. 2012).
 Mergers & Acquisitions
Liability of Directors Who Approve
Mergers
Delaware
If merger governed by entire fairness, difficult to
obtain early dismissal under DGCL 102(b)(7)
Emerald Partners v. Berlin, 787 A.2d 85, 94 (Del.
2001); In re Cornerstone Therapeutics Inc.
Stockholder Litigation, 2014 WL 4418169 (Del. Ch.
Sept. 10, 2014)
Wisconsin
Dismissal on the pleadings under Wis. Stat.
180.0828(1) Data Key Partners v. Permira Advisers
LLC, 849 N.W.2d 693 (Wis. 2014).
 Mergers & Acquisitions
Mergers Following Successful Any
& All Tender Offers
Wisconsin
Short-form merger under Wis. Stat.
180.1104(1) requires parent to hold at least
90% of each class of subsidiarys shares
Delaware
DGCL 251(h) [in the materials] allows
merger of same terms as tender offer, so long
as acquirer has acquired at least a majority of
the targets stock
 Director Liability
Codification
MBCA 8.30, 8.31 Codified standards of conduct and
liability
Delaware & Wisconsin have no counterpart
Limitations on Personal Liability
Wisconsin Opt-out Wis. Stat. 180.0828
Delaware Opt-In DGCL 102(b)(7)
Mandatory Indemnification
Wis. Stat. 180.0851(1); DGCL 145(c); MBCA 8.52 If
director successful on the merits or otherwise
Wis. Stat. 180.0851(2) On opt-out basis, full
indemnification subject to exceptions comparable to
immunity statute
 Conflict-of-Interest
Transactions
Wis. Stat. 180.0831 Transactions in
which director has direct or indirect
interest not voidable solely because of
that interest if approved by disinterested
directors or shareholders or fair
MBCA 8.60-8.63
Exclusive list of conflicts of interest [in the
materials]
Approval by disinterested directors or
shareholders validates the transaction
 Advance Waiver of Business
Opportunities
Delaware DGCL 122(17) Corporation has
the power to Renounce, in its certificate of
incorporation or by action of its board of
directors, any interest or expectancy of the
corporation in, or in being offered an
opportunity to participate in, specified
business opportunities or specified classes or
categories of business opportunities that are
presented to the corporation or 1 or more of its
officers, directors or stockholders.
MBCA 69 Business Lawyer 717 (May 2014)
 Closely-Held Corporations
Wisconsin
Statutory Close Corporation Statute Wis. Stat.
180.1801 to .1837
Wis. Stat. 180.1430(2)(b) Judicial dissolution if
those in control of corporation act in a manner that is
illegal, oppressive or fraudulent.
Model Act
MBCA 14.30 to 14.34 Procedures governing
judicial dissolution, including election to purchase in
lieu of dissolution
MBCA 7.32 Shareholder Agreements May be
inconsistent with Act so long as unanimous