US - A US court ruling that Rupert Murdoch's News Corp must face charges over its alleged failure to uphold a promise to seek shareholder approval before extending a "poison pill" strategy has been welcomed by ABP and Hermes.
The Dutch Stichting Pensioenfonds ABP and UK-based Hermes funds filed a lawsuit against News Corp in October 2005, along with 11 other global pension and investment funds, in response to the company’s decision to extend its anti-takeover or “poison pill” provisions beyond the agreed November 2005 expiration date.
They allege News Corp promised to seek shareholder approval before extending the provisions, as part of a series of corporate governance improvements it agreed to in order to win investor support for its transfer of domicile from Australia to the US.
A spokesman for News Corp told Global Pensions: “There was no promise.”But on 20 December, Delaware Chancery Court chief judge William Chandler found adequate grounds for the claims of breach of contract.
Dismissing the remaining three claims alleging fraud, equitable fraud and negligent misrepresentation, and breach of fiduciary duty, he said the burden was now on the plaintiffs to prove that, “a contract or promise was actually made that the Board Policy [of News Corp] would be irrevocable.”
Hermes’ director for governance and engagement, Paul Munn, said he was pleased the ruling had upheld the contract issue, and commented: “News Corp had applied to the court to have the action thrown out for being frivolous and vexatious, and it certainly was neither of those, Hermes doesn’t enter into frivolous actions.
“You have to be able to rely on what people tell you, without the need to have everything in the hands of lawyers which is a very cumbersome and inefficient process.”
A spokesman for ABP concurred: “If everything a company does has to first be approved by the lawyers before you can trust it, it would cost a lot of time. So if the person in charge makes a promise, that’s what it has to be.” News Corp established the poison pill in November 2004 to protect against a move by major shareholder John Malone to further increase his 18% stake.
The top stories this week were the High Court's decision to block the £12bn annuity transfer from Prudential to Rothesay Life, and a separate court ruling that 'raises the bar' for pension rectification exercises.
Guaranteed minimum pension (GMP) equalisation has soared to the top of pension schemes' to-do lists, with 58% stating it is a priority project, research from Equiniti has revealed.
Professional Pensions is holding its defined contribution (DC) conference on 4 September.