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Petitioners point out that no Burndy-Japan shareholder
exercised any of the six veto powers and contend that this shows
that Burndy-US controlled Burndy-Japan. We disagree; it is more
likely that Furukawa and Sumitomo never exercised the veto powers
because the existence of those powers caused Burndy-US to
cooperate with Furukawa and Sumitomo.
We conclude that the 80-percent vote requirement in the
articles of incorporation and the six veto powers in the 1973
basic agreement reduced Burndy-US’s voting power so it did not
have more than 50 percent of the voting power of Burndy-Japan.
c. Control of Burndy-Japan’s Presidents and Board of
Directors
Petitioners contend that Burndy-US controlled Burndy-Japan
because it had, and exercised, the right to control, choose, and
replace Burndy-Japan’s presidents and board of directors from
1973 to 1993. Petitioners also contend that Burndy-US controlled
the Burndy-Japan board of directors because, under the Burndy-
Japan articles of incorporation and the 1973 basic agreement,
Burndy-US had the right to name 5 of the 9 Burndy-Japan
directors. We disagree.
i. Election of Members of Board of Directors
The 1973 basic agreement stated that the shareholders could
nominate persons to serve as members of the Burndy-Japan board of
directors in proportion to the shareholder’s ownership interests.
The Burndy-Japan articles of incorporation required that, to be
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