Background
Shares of Nikola Corp. NKLA experienced a nearly 2% fall in the Extended Session on Thursday. This unexpected market fluctuation was induced by the company’s statement, which revealed a delay in the previously scheduled shareholder meeting. The cause of this delay is due to the company’s failure to garner adequate support for its latest proposal to issue new stock. Nikola Corp’s shareholder meeting has been adjourned until August 3.
A Detailed Look at the Shareholder Meeting History
This delay in the shareholder meeting is not an unprecedented event for the company. Interestingly, the recently adjourned meeting itself is a reappointment from an earlier meeting scheduled for early June. The previous meeting was postponed because of the same issue, deciding upon the new stock’s release.
Introduction and Impact of New Corporate Law
Nikola is hoping for a new corporate law in Delaware, where the company is incorporated, to facilitate its plan. The law, which is expected to take effect from August 1, is aimed to amend the current voting threshold. As per current regulations, the voting threshold requires a majority of the outstanding common stock. However, the proposed new law would require a majority of the shares actually voting on the proposal.
Impact of the New Law on the Company
- The proposed new law would alter the criteria of securing the approval of a majority of the outstanding common stock to getting the majority of the votes from the shares present at the meeting and actually voting on the proposal.
- This change could potentially enhance the chances of Nikola’s new stock proposal passing through. The prospects of this would largely depend on the voting behavior of the shareholders who attend the adjourned meeting.
Timeline of Events
- Early June: The first meeting regarding the new stock issue is planned but does not proceed due to lack of adequate support.
- August 1: Introduction of new corporate law in Delaware that could potentially help Nikola secure approval.
- August 3: The company’s adjourned shareholder meeting is rescheduled to this date, where voting on the new stock issue proposal is expected to happen under the new corporate law.
Outlook
- Shares of Nikola Corp. may continue to exhibit some volatility due to these ongoing uncertainties surrounding the new stock issuance proposal.
- Future shareholder meetings and the implementation of the new corporate law are expected to determine the direction of Nikola’s stock and its broader market behaviors.
It is crucial for investors and market participants to keep a watchful eye on these developments. With its potential to reshape the numbers in Nikola’s favor, the new law and the upcoming shareholder meeting could have significant implications for the company’s future and its shareholder dynamics.