Mich. Comp. Laws § 450.1404 requires companies to give shareholders written notice of the time, place if any, and purposes of any upcoming meeting. Notice of the purposes of a meeting, the statute continues, shall include notice of shareholder proposals that a shareholder intends to submit for a vote.
Whenever a Michigan corporation holds a shareholder meeting, it must disclose any proposals on the agenda that a shareholder wishes to submit for shareholder action. In 2012, one of Southern Michigan Bancorp's shareholders asked the company to circulate such a proposal before the company's 2013 annual meeting. In its proxy statement discussing the agenda for the meeting, Bancorp neither distributed the proposal nor described it. After the proposal was voted down at the meeting, the shareholder sued Bancorp and the chairman of its board of directors for violating their statutory and common-law disclosure obligations. A federal district court dismissed the complaint.
Did the district court err by dismissing the trust's claim?
The Court held that the district court erred by dismissing the trust's claim because the corporation did not fulfill its statutory obligation to give notice of shareholder proposals as required by under Michigan law. The Court reversed the judgment of the district court and remanded for further proceedings.