Natural Health Trends Corp.
Extract: Bylaws Amendment (Plain English Desc) from a 8-K on 12/23/2019   Download
SEC Document
SEC Filing
Natural Health Trends Corp. (the “Company”) notes that the Delaware Chancery Court ‎ issued an opinion in In re VAALCO Energy, Inc. Stockholder Litigation invalidating as a ‎matter of law provisions of the certificate of incorporation and bylaws of VAALCO Energy, ‎Inc., a Delaware corporation, that permitted the removal of VAALCO’s directors by its ‎stockholders only for cause. The Chancery Court held that, in the absence of a classified board ‎or cumulative voting, VAALCO’s “only-for-cause” director removal provisions conflicted with ‎Section 141(k) of the Delaware General Corporation Law (“DGCL”) and were therefore invalid. ‎The Company further notes that the Chancery Court issued an opinion in Frechter v. Zier ‎invalidating a provision of a Delaware corporation’s bylaws that required a supermajority ‎stockholder vote to remove directors. The Chancery Court held that the supermajority bylaw ‎provision was invalid because it conflicted with Section 141(k) of the DGCL, which provides ‎that a director may be removed by vote of a simple majority of the shares then entitled to vote at ‎an election of directors.
Section 8 of the Certificate of Incorporation (the “Charter”) and Section 3.4 of the ‎Amended and Restated Bylaws (the “Bylaws”) of the Company contain “only-for-cause” ‎director removal provisions that require a supermajority vote, and the Company does not have a ‎classified board of directors or cumulative voting. As such, and in light of the foregoing ‎decisions of the Chancery Court, effective December 19, 2019, the Company’s Board of Directors amended Section 3.4 of ‎its Bylaws to provide that any director may be removed, with or without cause, with the required vote of the holders of shares then entitled to vote at an election of directors. Further, the Company will ‎not attempt to enforce the director removal provision contained in its Charter to the extent not in compliance with the DGCL, and the Board of Directors will recommend at the ‎Company’s 2020 annual meeting of stockholders that the Charter be amended to be compliant ‎with the terms of the DGCL.‎