CBS on Wednesday amended its lawsuit against Shari Redstone and National Amusements in the latest attempt to dilute her voting power as the majority shareholder of the media giant.
In a new filing in a Delaware court, CBS challenged NAI’s vote last week to amend its bylaws to prevent the CBS board’s efforts to reduce its current stake in the company from nearly 80 percent to just 17 percent.
“These actions and threats by Defendants are disloyal, inequitable, and not entirely fair,” CBS wrote in its complaint. “Relief from such actions and threats is necessary to protect CBS and its public stockholders from exploitation by its controlling stockholder.”
The filing sets up a legal showdown between Redstone and the CBS board, which voted in a special meeting last Thursday to issue new dividends in an effort to strip NAI of its controlling stake in the company.
In a pre-emptive move last Wednesday, NAI amended its bylaws to require a 90 percent supermajority for any such vote by the CBS board — which would prevent a dilution given the board’s current composition.
CBS’ challenge rests on the SEC’s Rule 14c-2, which it said prohibits the NAI’s bylaw change from becoming effective until at least 20 days after an information statement — which CBS intends to file — is provided to CBS stockholders.
“These purported bylaw amendments are inequitable and invalid under Delaware law and were not effective at the time of the Special Board Meeting pursuant to federal securities laws,” wrote CBS in its amended complaint. The network further described Redstone’s move as “an improper attempt to block CBS’s directors from exercising their statutory authority as required by their fiduciary duties in the best interests of all CBS stockholders.”
Earlier last week, CBS and its independent board members filed a lawsuit seeking to restrain NAI from interference in its operations — including a planned special meeting of the board, which took place last Thursday.
The board voted 11-3 to approve the dilution, short of a 90 percent supermajority, but it has to be approved by the Delaware court.