Allocating super-voting stock to contingent capital holders satisfies Delaware's legitimate business purpose requirement, because the allocation serves to avoid insolvency and dissolution of the institution.
Source quote, verbatim
Allocating super-voting stock, as proposed herein, would be for the legitimate business purpose of avoiding both insolvency and dissolution.
Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473
Holds when
Delaware permits alternative voting arrangements if the charter provides for them or is amended
Increases are limited if inequitable or in breach of fiduciary duty
Classification
conditionsupport: arguedgovernance-design
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