Court Enjoins Ashford Proxy Fight in Unusual Ruling
Thursday, May 26, 2016
Section: CII Governance Alert
The U.S. District Court for the Northern District of Texas May 20 enjoined activist shareholder Sessa Capital from pursuing a proxy fight at Ashford Hospitality Prime (AHP).
In the unusual decision, the district court permitted the AHP board to block Sessa nominees from standing for election, since the court found that the board “could rationally believe” that Sessa had plans for the company that were not disclosed to the company as required by AHP’s advance notice bylaw. The court said Maryland law afforded deference to the board’s judgment on this under the business judgment rule.
Sessa indicated it would appeal the decision, and that it fully disclosed as required under federal securities laws. The activist fund also asked for a stay of the district court order, and is seeking to postpone AHP’s June 10 annual meeting.