- 65 -
In any event, even assuming arguendo that Mr. Balotti were
correct in his view that all of the restrictions involved in this
case, or similar restrictions, are common in Delaware corpora-
tions with investor profiles analogous to that of Alumax, in the
instant case, we nonetheless would determine the impact, if any,
of the director and stockholder class voting requirements, the
mandatory dividend provision, and the objectionable action
provision on the voting power of the Alumax class C common stock
for purposes of section 1504(a)(1) and amended section
1504(a)(1)(B) and (2)(A), just as we would consider the impact,
if any, of such facts on the voting power of the stock of any
17 (...continued)
Delaware law to the Alumax board except as provided in the 1984
restated certificate of incorporation and were matters on which
under Delaware law and that certificate the Alumax board was to
vote and on which the vote or approval of the Alumax stockholders
was not required by Delaware law, although it was required by
that certificate. By way of further illustration, Mr. Balotti
concludes that the mandatory dividend provision, which he de-
scribes as giving the Mitsui group "80 percent of the first 35%
of income distributed by dividends", is comparable to provisions
that grant superior dividend rights to preferred stockholders.
We disagree. Although the parties agree that the mandatory
dividend provision gave the Alumax class B common stock superior
dividend rights with respect to 35 percent of Alumax' net income,
that provision also required the Alumax board to declare and pay
dividends to all the Alumax stockholders to the extent of 35
percent of Alumax' net income. In contrast, the preferential
dividend provisions to which Mr. Balotti compares the mandatory
dividend provision usually do not obligate a company's board of
directors to declare and pay dividends, see 12 Fletcher
Cyclopedia of Corporations, secs. 5443-5446 (perm. ed. 1996
rev.), although once the board decides to declare dividends,
preferred stockholders with preferential dividend rights have
superior rights to such dividends.
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