USA Law and Practice Contributed by: Matt Hurd, Melissa Sawyer and Scott Crofton, Sullivan & Cromwell LLP
tion or proposal to be properly raised at a stock - holder meeting. In Delaware, stockholders, by default, have the right to take action by written consent without holding a stockholder meeting unless prohibited by the corporation’s certificate of incorporation. Most public corporations prohibit stockholder action by written consent in their certificates of incorporation. 5.4 Shareholder Claims A stockholder of a US corporation may file (i) direct claims against the corporation or its officers and directors for actions that directly harm the stockholder or (ii) derivative claims against the corporation’s officers and directors for actions that harm the corporation. A com - mon example of a derivative claim brought by a stockholder is a claim alleging a breach of fiduci - ary duty by the board. Prior to filing a derivative claim, a stockholder must demand that the board pursue the claim or, in most states, including Delaware, demon - strate that such a demand is futile because of the board’s conflict of interest with respect to the litigation. This procedural requirement does not exist for direct claims, so stockholders at times try to refashion derivative claims as direct claims. 5.5 Disclosure by Shareholders in Publicly Traded Companies Federal Securities Law The federal securities law requires an investor or group of investors who acquire beneficial own - ership of more than 5% of a public company’s voting equity securities to file reports relating to their ownership on Schedule 13D, or if eligible, on Schedule 13G. Passive investors that own less than 20% of a company’s equity securities
are eligible to report that ownership on Schedule 13G, and are otherwise subject to a less onerous reporting regime than that applicable to Sched - ule 13G filers. An investor who acquires more than 5% of a public company’s voting equity securities, and is not eligible to file a Schedule 13G, must report the acquisition on a Schedule 13D with the SEC within five business days of crossing the 5% threshold. Schedule 13D requires the disclosure of the iden - tity of the investor, information about the inves- tor’s ownership of the company’s securities and sources of funds, any of the investor’s arrange - ments with respect to securities of the company and the purpose of the acquisition, including any plans or proposals which the investor may have to make changes to the board or management or to consummate a corporate transaction. The Schedule 13D must be amended to reflect any material changes in the disclosure contained in the original Schedule 13D (including the acqui - sition or disposition of 1% or more of the class of equity securities of the corporation) within two business days of such change. Subject to certain exceptions, an investor eligible to file a Schedule 13G must file the report within 45 days after the end of the calendar quarter in which the investor first became obliged to make such a filing. Institutional Investment Managers Institutional investment managers that have assets under management of at least USD100 million must report to the SEC their holdings of exchange-traded equity securities, certain equity options and warrants, shares of closed- end investment companies and certain convert - ible debt securities on Form 13F within 45 days of the end of each calendar quarter. Form 13F requires disclosure of the name of the manager, the name and class of security holdings and the
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