Last year, I reported that the stockholders of Fidelity National Financial, Inc. had failed to approve a proposal to convert the corporation from a Delaware to a Nevada corporation. The company has not given up on the proposal. Yesterday, it filed preliminary proxy materials re-proposing reincorporation in Nevada. According to the company, this year’s proposal includes a few tweaks in response to stockholder concerns:
A similar proposal to reincorporate FNF in Nevada was submitted to our stockholders at our 2024 annual meeting (the 2024 Redomestication Proposal), but did not receive the vote required to approve the Redomestication. We engaged in discussions with certain of our stockholders regarding the 2024 Redomesticaton Proposal both prior to and after the 2024 annual meeting. From these discussions, we understand that there is a desire to preserve, after the Redomestication, certain stockholder rights that are currently in our current Fifth Amended and Restated Certificate of Incorporation (the Delaware Charter). Since the Board of Directors continues to believe there are many important reasons the Redomestication is advisable and in the best interests of the Company and its stockholders, we have updated the proposed Nevada Charter to preserve certain stockholder rights under our Delaware Charter within the statutory framework established by Nevada law. In particular, the updated Nevada Charter provides that:
- The limitation on individual liability afforded to our directors and officers under the Nevada Revised Statutes (as amended from time to time, the NRS) does not apply to any breach of fiduciary duty that (i) constitutes a breach of the duty of loyalty, (ii) involves acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (iii) results in a transaction from which a director or officer derived an improper personal benefit;
- The Company is prohibited from effectuating any reverse split of our capital stock (that otherwise would not require stockholder approval pursuant to NRS 78.207) without stockholder approval; and
- The exception to dissenter’s rights provided under NRS 92A.390(1) will not apply (if dissenter’s rights would otherwise be available) to any stockholders who are required in the relevant transaction to accept cash-only consideration for their shares.
This illustrates another point that I made long ago when I wrote my first book on Nevada’s corporate law – both Delaware and Nevada provide menus of charter provisions such that there is not just one Delaware charter or one Nevada charter.
Vexingly, Fidelity National continues to its proposal as a “redomestication”. As I have now pointed out several times, conversion and domestication are two entirely different statutory procedures. Failure to distinguish between these procedures has in my experience resulted in improper filings.