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News Corp. Unveils Constitution Changes

Oct 6, 2004  •  Post A Comment

News Corp. late Wednesday unveiled a series of changes to its corporate constitution that the media giant hopes will convince Australian shareholders to support a domicile change to the United States.

A number of large shareholders in Australia had indicated they would not support News Corp.’s reincorporating in the United States because the company rejected calls to adhere to strict corporate governance rules. That prompted News Corp. to put in the changes requested by the shareholders.

Among the amendments to be made to the constitution, the company would retain its full foreign listing on the Australian Stock Exchange, issue new shares worth only one vote and allow shareholders with at least 20 percent of the outstanding voting shares to make written requests to call special shareholder meetings.

The amendments are subject to approval by the Australian Federal Court and, if approved, would be formalized in the company’s U.S. Certificate of Incorporation, through an agreement with controlling shareholder and Chairman Rupert Murdoch’s investment vehicle or via board approval.

Australian shareholders are expected to vote on the reincorporation plan Oct. 26.

News Corp.’s board also agreed to include a requirement that shareholders’ rights plans have a one-year wind-down period unless an extension is approved by the stockholders.

In addition, the board said it would consider several corporate governance measures prior to its next annual meeting, including how to determine the independence of board members, disclosing the company’s process for finding successors for top executives, sorting out how the company will consider shareholder proposals and considering the adoption of a plan by which all directors are elected annually.

At the same time, Mr. Murdoch’s investment vehicle, Murdoch Interests, agreed not to acquire huge numbers of additional voting shares beyond the nearly 29.5 percent stake the vehicle will receive following reincorporation, except to the extent that a purchase equals either 3 percent of outstanding shares every six months, or 6 percent of outstanding shares every 12 months.

Murdoch Interests also agreed not to sell any of its voting shares to any individual or related group if such a sale would result in the purchaser owning more than 19.9 percent of the company’s outstanding voting stock. An exception would be made if the purchaser agrees to buy all voting and nonvoting stock in News Corp.