Laws and Fiduciary Broken Retail Antagonism:
Violation of DGCL 242(b)(2):
AMC incorporated a DGCL 242(b)(2) opt-out clause into its Third and Amended Articles of Incorporation without conducting a class shareholder vote. On December 17, 2013, two conflicting voting structures were presented:
A Form S-1A Prospectus, effective at 4 p.m., stipulated separate class voting rights.
The Third and Amended Articles of Incorporation, filed at 9:34 p.m., inserted a 242(b) opt-out clause, thereby eliminating separate class voting rights.
Claim: The single-class voting rights were still operative during the March 14, 2023, proxy proposals.
Violation of DGCL 241(a):
AMC's Third Amended and Restated Certificate of Incorporation contradicts Section 241(a) of the DGCL, which forbids the inclusion of unlawful or improper provisions at the time of filing an amendment. Consistency with the IPO prospectus is crucial to avoid misrepresentation and criminal offenses.
ANTARA Violations:
Contravention of NYSE Listed Company Manual 312.03(b)(i): Antara failed to meet meet minimum price rule. Antara was therefore limited to purchasing APE shares in an amount totalling no more than 1% of AMC�s outstanding shares. Computation: 517,580,415 x .01 = 517,580 APE shares. In contrast, 258M APE shares were purchased by Antara with an agreement to vote yes on all three AMC proxy proposals of March 14, 2023.
Contravention of NYSE Listed Company Manual Regulation 312.03(c): AMC violated NYSE 312.03(c) regulations by issuing AMC Preferred Equity Units without obtaining a separate majority vote by Class A shareholders for issuance exceeding 20%.
Court Memorandum Opinion (August 11, 2023):
Vice-Chancellor Zurn deemed the DGCL 242(b)(2) separate class voting rights claim weak and without merit. She also stated that Antara's APE share purchases could not be challenged due to AMC having the DGCL 242(b)(2) opt-out clause in its Third and Amended Articles of Incorporation. Despite acknowledging my objection and treating it as a court motion for reargument , Vice-Chancellor Zurn did not directly address the claims and evidence that DGCL 242(b)(2) separate class voting rights may be in effect, as the opt-out clause was potentially inserted into AMC Third and Amended Articles of Incorporation in violation of DGCL 241(a).
Subsequent Developments:
A Motion for Reargument and stay order was filed on August 21, 2023. My motion is pending, without response, as of August 27, 2023. This delay is notable, given Vice-Chancellor Zurn's usual promptness in addressing dockets.
Conclusion:
The DGCL 242(b)(2) opt-out clause significantly impacts the outcome of the proxy proposals. This evidence, which could have potentially invalidated the proposals, was overlooked and not investigated by the court, thereby causing considerable harm to common shareholders.
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