Corporate Services of Nevada

LEGAL ADVANTAGES; A COMPARISON WITH DELAWARE (continued)
Not intended to be legal advice, for discussion purposes only.

1. Classified Board of Directors
In Nevada, a corporation may classify its board of directors provided that at least one-fourth of the total number of directors is elected annually. Nev. Rev. Stat. § 78.330(2).

Delaware law permits any Delaware corporation to classify its board of directors into as many as three classes with staggered terms of office. After initial implementation of a classified board, one class will be elected at each annual meeting of the stockholders to serve for a full term or until their successors are elected to take office. Del. Code Ann. tit. viii, § 141(d).

2. Quorum and Required Vote for Stock Corporations
In Nevada, generally, a majority of the stockholders with voting power (present in person or by proxy, whether or not the person holding the proxy has authority to vote on all matters), constitutes a quorum for the transaction of business.   Nev. Rev. Stat. § 78.320(1)(a).   Any action (other than the election of directors) taken by stockholders is approved if the number of votes in favor of the action is greater than the number of votes against the action. Nev. Rev. Stat. § 78.320(1)(b).

Directors are generally elected at the annual meeting of the stockholders by at least a plurality of the votes cast at the annual meeting unless a larger proportion is specified in the articles or bylaws.   Nev. Rev. Stat. § 78.330(1). The articles of incorporation may also provide that the voting power of an individual director or classes of directors may be greater or less than any other individual director or classes of directors. Nev. Rev. Stat. § 78.330(3).

In Delaware, the certificate of incorporation or bylaws of any corporation authorized to issue stock may specify the number of shares having voting power and the number of such shares that must be present or represented by proxy at any meeting in order to constitute a quorum for the transaction of any business.    Del. Code Ann. tit. viii, § 216. A quorum may not consist of less than one-third of the shares entitled to vote at the meeting, except that, where a separate vote by a class or series or classes or series is required, a quorum consists of no less than one-third of the shares of such class or series. Del. Code Ann. tit. viii, § 216.   In the absence of such specification in the certificate of incorporation or bylaws of the corporation, a majority of the shares entitled to vote constitutes a quorum at a meeting of stockholders; in all matters other than the election of directors, the vote of the majority of shares present at the meeting and entitled to vote on the subject matter is required; and directors are elected by a plurality of the votes of the shares present at the meeting and entitled to vote on the election of directors. Additionally, a bylaw amendment adopted by stockholders that specifies the votes that shall be necessary for the election of directors shall not be further amended or repealed by the board of directors. Del. Code Ann. tit. viii, § 216.

3. Cumulative Voting
Cumulative voting for directors entitles stockholders to cast a number of votes that is equal to the number of voting shares held multiplied by the number of directors to be elected.   Stockholders may cast all such votes either for one nominee or distribute such votes among up to as many candidates as there are positions to be filled.   Cumulative voting may enable a minority stockholder or group of stockholders to elect at least one representative to the board of directors where such stockholders would not otherwise be able to elect any directors.

For Nevada corporations, cumulative voting in the election of directors is permitted only where provided for in the articles of incorporation, and certain notice procedures are followed. Nev. Rev. Stat. § 78.360.   Similarly, a Delaware corporation may provide for cumulative voting in the corporation’s certificate of incorporation. Del. Code Ann. tit. viii, § 214.