By Jerry Carter. In an October 29, 2012 Writ of Mandate, the Washoe County Business Court ordered a Nevada corporation to hold an election of directors. NRS 78.345 authorizes a district court to compel an election of directors of a Nevada corporation if a meeting of shareholders has not occurred within 18 months. The Writ of Mandate includes the following notable features:
– The election of directors is required to take place in Reno, Nevada.
–The Business Court set the record date for the election of directors.
–The Business Court required the corporation’s transfer agent to provide a list of shareholders to the petitioner.
The foregoing components of the order appear to have been obtained by agreement. My personal view is that an order compelling an election of directors can be an empty victory unless the challenging shareholder has, or anticipates obtaining, the necessary shareholder votes to achieve the desired outcome. Also, where the corporation is publicly traded, the challenging shareholder will need to comply with the proxy solicitation rules issued by the Securities and Exchange Commission. This is a time-consuming and expensive undertaking.