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Petitioners contend that the supermajority voting
requirements in the articles of incorporation meant little
because the laws of most U.S. States require that, to change the
number of authorized shares or to sell assets other than in the
usual course of business, an 80-percent majority of shareholders
must approve. Petitioners also contend that the veto powers
differ little from statutory restrictions on domestic corporate
boards provided by the Model Business Corporation Act (MBCA). We
disagree. Petitioners cite no State laws or MBCA provisions that
give 25-percent shareholders the veto powers present in these
cases. The 1973 basic agreement, which created the veto powers
that were in effect in 1992, states that the agreement shall be
construed under Japanese law. Petitioners have not shown whether
State law or MBCA provisions are similar to Japanese law.
Petitioners point out that dividends were more important to
Furukawa and Sumitomo than to Burndy-US because Burndy-US
received royalties and management fees. However, the agreements
between Burndy-Japan shareholders relating to management fees and
royalties expired after 5 years. Burndy-US had no guaranty that
the management fees and royalties would continue; thus, its need
for dividends could increase. Burndy-US’s receipt of royalties
and management fees does not show that Burndy-US controlled
Burndy-Japan.
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