ÿWPCø g€mÀÇoâÃÙR´zˆPñª­µŸ=6~š† ¯ 5Bg"}H^&áöý S¬kV{o<ј.lýÁˆ6zÄ á¿1мÎ϶d~W„Z³^|^Âi.Ó=Âî×¢³ Ûf¡+-dŸˆ±Â’åôÚ¼ M÷‚{ØRŲ®Fº08ÏÑ©ÁÃãem,çÜ ¢éåxÛnw û‰RðØÜ䋤ÚO=+ùê÷êññ߸¢ivÙÇ„8 –ûµWëAš¥­%MT6BÚŠB8tìCª#Ý’éj7ÀÅÙ["oÃ'屉Œ·¥Ÿe½Çmç v½f™†r}5ò2_“HÏt„Û´é¢ëW;'ÀPsÊ_ñÁ?»8 ôdýzyÃÜ5¡æê»ÕüÆe—A í[3àø ‡¦3[d )V4}™_‰'›=ÛÀ[¿2e-2â>tBjyüS xÍÆïÍ*1”6löE¬ÊÖ~RÒÒ½õ-85’ßvU 6{çá_Œ˜Að l$›¯_{z4~§¿(Jš«?ÄnÀt¤;„gF5àá¢àÚŠ¤”QŸŸƒnÛ0O¥`,¤|Nöš‚ü—BmÃ,3CadˆKÜ#zÈù‡r^QA(S«[#ÁúUN» % 0( ^ 7 wC 4G [ j ml Nƒ … Ù 0lf 0DÒ â qø U>iiÕ§_||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| BÛ˜HP LaserJet 4000 Series PCL 6ÈÈ,,,,ÈÈ0(ÈhH  Z‹6Times New Roman RegularX($¡¡Îªo2â ›„i2ê:i¢Ø+003|x ÿU‹ÿÀÀÀ  ÏÝ ƒüÝ$Ýà  àòòÚ  Ú4Ú  ÚóóÝ  ÝÔ_Ô€€Since€July€12,€2002€the€companyððs€investment€manager€has€been€CEF€Advisors,€Inc.€Ð ° ÐDefendant€Winmill€serves€as€President€of€CEF€Advisors,€Inc.,€which€is€a€wholly„ownedÐ œì Ðsubsidiary€of€Winmill€&€Co.,€Inc.,€a€publicly„owned€company,€whose€voting€stock€is€controlledÐ ˆØ Ðby€Winmillððs€family.€€(Compl.€ðððð€8,€14€&€15.)((3üÝ$¤¤Ý ƒ!ÝÝ  Ýà  àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó ØÝ ƒüÝ$Ýà  àòòÚ  Ú5Ú  ÚóóÝ  ÝÔ_Ô€€Plaintiff€Shaker€is€the€only€plaintiff€stockholder€and€so€he€is€the€only€plaintiff€able€toÐ ° Ðassert€such€a€claim. gÝ ƒüÝ$Ýà  àòòÚ  Ú1Ú  ÚóóÝ  ÝÔ_Ô€€The€Complaint€asks€the€Court€to€declare€the€Net€Asset€Value€Proposal€adopted€at€theÐ ° Ð2004€annual€meeting.€€(Comp.€ðð€41.)€€But€counsel€appear€to€have€abandoned€this€issue€by€notÐ œì Ðaddressing€it€in€plaintiffsðð€memorandum€or€argument.ô\  `‹&Times New Roman ËÝ ƒüÝ$Ýà  àòòÚ  Ú2Ú  ÚóóÝ  ÝÔ_Ô€€Unless€otherwise€stated,€all€statutory€citations€are€to€the€Corporations€and€AssociationsÐ ° ÐArticle. UÝ ƒüÝ$Ýà  àòòÚ  Ú3Ú  ÚóóÝ  ÝÔ_Ô€€Md.€Rule€1„104€generally€prohibits€citation€to€unreported€Maryland€decisions€butÐ ° ÐDelaware€courts€do€not€prohibit€their€citation.€€òòSee€Hudson€v.€Prime€Retail,€Inc.óó,€2004€WLÐ œì Ð1982383€(Md.€Cir.€Ct.)€at€p.€13,€n.17. dÝ ƒ!ÝÝ  ÝÔ_ÔÑ8€/LXdìdÈ8ÑRICHARD€J.€SHAKER,€et€al.à h àà À à*à0  àIN€THEа(#(# ÐÌà  àPlaintiffsà ¸ àà  àà h àà À à*à0  àCIRCUIT€COURTЈØ(#(# ÐÌv.€€€€€€€€€€€€€€€€à0 ` àà0¸ ` (#` (#àà  àà h àà À à*à0¸ (#¸ (#àFORÐ`°(#(# ÐÌFOXBY€CORP.,€et€al.à  àà h àà À à*à0  àBALTIMORE€CITYÐ8 ˆ(#(# ÐÌà  àDefendantsà ¸ àà  àà h àà À à*à0  àPart€20Ð `(#(# ÐÌà  àà ` àà ¸ àà  àà h àà À à*à0  àCase€No.:€24„C„04„007613€€€€€€€€€€€€€€€€€€€€€€€€€Ðè 8 (#(# Ðà  àà ` àà ¸ àà  àÌà  àà ` àà ¸ àà  àà h àà À à*Ð À  Ð******************************************************************************Ð ¬ü  Ðò òòòó óóóà@  !ìàò òòòMEMORANDUM€OPINIONó óóóˆÐ ˜è  ÐÌÓÓà  àà ` àThis€action€was€filed€on€October€12,€2004€by€Richard€J.€Shaker,€owner€of€14,400Ð pÀ Ðshares€of€stock€in€Foxby€Corp.,€and€three€individuals€(ð ðthe€Shaker€nomineesðð)€nominated€by€himÐ H˜ Ðto€fill€board€positions€at€the€corporationððs€September€7,€2004€annual€meeting.€€The€ComplaintÐ  p Ðsets€forth€three€counts€against€the€defendant€corporation€(ð ðFoxbyðð),€Thomas€B.€Winmill,€FoxbyððsÐ øH ÐPresident,€CEO€and€General€Counsel;€James€E.€Hunt,€Bruce€B.€Huber€and€John€B.€Russell€(ð ðtheÐ Ð  Ðmanagement€nomineesðð);€and€Peter€K.€Weiner,€another€board€member,€alleging€breaches€ofÐ ¨ø Ðfiduciary€duties€and€seeking€declaratory€and€injunctive€relief.€€Plaintiffs€challenge€the€election€ofÐ €Ð Ðthe€three€management€nominees€at€the€2004€annual€meeting,€as€well€as€by„law€provisionsÐ X ¨ Ðadopted€by€the€board€since€2002,€governing€board€election€procedures.€€€Defendants€have€filed€aÐ 0"€  Ðmotion€to€dismiss€the€Complaint,€or,€in€the€alternative,€for€summary€judgment.€€Plaintiffs€haveÐ $X" Ðopposed€the€motion.€€Arguments€were€heard€on€March€7,€2005.€€By€the€Order€accompanying€thisÐ à%0!$ ÐMemorandum€Opinion€the€Court€has€denied€defendantsðð€motion.Ð ¸'#& ÐÌÐ h+¸&* Ðà@ÓÓ!ìàòòStandard€of€ReviewóóˆÐ ° Ðà  àWhen€considering€a€motion€to€dismiss€filed€pursuant€to€Maryland€Rule€2„322(b),€the€Ð ˆØ ÐCourt€must€assume€the€truth€of€all€relevant€and€material€facts€that€are€well„pleaded€and€allÐ `° Ðinferences€that€can€be€reasonably€drawn€from€the€pleadings.€€òòBennett€Heating€&€AiróóÐ 8 ˆ ÐòòConditioning,€Inc.€v.óó€òòNations€Bankóó,€103€Md.€App.€749,€òòrevððd€in€part€on€other€groundsóó,€342€Md.Ð  ` Ð169€(1996).€€If€the€Court€considers€matters€outside€the€pleadings,€however,€it€must€treat€theÐ è 8  Ðmotion€as€one€for€summary€judgment€under€Maryland€Rule€2„501,€after€determining€that€there€isÐ À  Ðno€genuine€dispute€as€to€any€material€fact€and€that€judgment€can€be€entered€as€a€matter€of€law.€Ð ˜è  ÐòòBoyd€v.€Hickmanóó,€114€Md.€App.€108€òòóó(1997).€€All€parties€must€be€given€a€reasonable€opportunityÐ pÀ Ðto€present€material€pertinent€to€such€a€motion.€€Md.€Rule€2„322(c).€Ð H˜ Ðà@55%ìàòòDiscussionóóˆÐ  p Ðà  àà ` àPlaintiffs€ask€this€Court€to€declare€that€Phillip€Goldstein,€Rojeev€Dos€and€AndrewÐ øH ÐDakos€(the€Shaker€nominees)€were€duly€elected€to€the€board€of€directors€at€the€2004€annualÐ Ð  Ðmeeting;€that€the€management€nominees€were€not€elected€(and€enjoining€them€from€taking€officeÐ ¨ø Ðas€directors);€and€that€the€by„law€amendments€adopted€by€the€corporate€directors€since€2002,Ð €Ð Ðwhich€affected€the€election€of€directors€at€the€2004€annual€meeting,€are€null€and€void€(andÐ X ¨ Ðenjoining€their€enforcement).׃×Ý ƒ#ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×Ð 0"€  Ðà  àà ` àBecause€plaintiffsðð€entitlement€to€relief€depends€upon€an€analysis€of€the€amendedÐ $X" Ðby„laws€of€the€corporation,€the€Court€will€address€first€the€notice€provisions€in€the€by„laws€andÐ à%0!$ Ðthen€the€other€challenged€provisions€concerning€director€qualification,€vote€requirements€Ô_ÔandÐ ¸'#& Ðjudicial€review€of€the€election€results.Ð ° Ðà@‰ ‰ ìàI.€€The€Notice€Provisions€in€the€By„LawsˆÐ ˆØ Ðà  àà ` àÔ‡X/LXXXÔThe€factual€circumstances€of€the€election€are€not€disputed.€€At€the€2004€annualÐ `° Ðelection€three€directors€were€to€be€elected,€labeled€Class€I,€Class€II,€and€Class€V.€€There€is€noÐ 8 ˆ Ðdispute€that€plaintiffs€knew€as€of€March€2004€that€the€Class€II€director€would€be€elected€at€theÐ  ` Ð2004€annual€meeting.€€(Ô_ÔComplÔ_Ô.€at€22.)€€There€is€also€no€dispute€that€the€plaintiffs€were€on€noticeÐ è 8  Ðof€the€Class€I€and€Class€V€positions€as€of€July€23,€2004,€when€Ô_ÔFoxbyÔ_Ô€filed€its€proxy€statement€forÐ À  Ðthe€September€7,€2004€annual€meeting.€€(Ô_ÔComplÔ_Ô.€at€23.)€€Plaintiffsðð€argument€that€filing€a€proxyÐ ˜è  Ðstatement€with€the€Securities€and€Exchange€Commission€(SEC)€was€not€a€public€announcementÐ pÀ Ðis€without€merit.€€As€pointed€out€by€the€defendants,€Article€II,€ðð€12(c)(3)€of€the€by„laws€statesÐ H˜ Ðthat€an€SEC€filing€constitutes€a€public€announcement.€€Ð  p Ðà  àà ` àAt€the€hearing€and€in€their€complaint€and€opposition,€the€plaintiffs€do€not€disputeÐ øH Ðthat€the€notice€requirements€are€valid€on€their€face,€only€that€their€validity€might€be€compromisedÐ Ð  Ðif€they€were€passed€to€interfere€with€shareholder€voting€rights.€€As€authorized€by€MarylandÐ ¨ø Ðstatute,€by„laws€may€specify€an€advance€notice€requirement€for€director€nominations.€€Md.€CodeÐ €Ð ÐAnn.€Corps.€&€Ô_ÔAssððnsÔ_Ô€ðð€2„504(f€)€(1999)׃×Ý ƒ#ÃÝòòÚ  Ú2Ú  ÚóóÝ  Ý×  ×.€€Article€II,€ðð€12(a)(2)€of€the€Ô_ÔFoxbyÔ_Ô€by„laws€requiresÐ X ¨ Ðshareholders€to€give€notice€of€annual€meeting€business,€e.g.,€notice€of€the€Shaker€nominees,€toÐ 0"€  Ðthe€secretary,€within€90€days€of€mailing€of€the€annual€meeting€notice.€€In€turn,€Article€II,€ððÐ $X" Ð12(a)(3)€of€the€by„laws€requires€notice€of€nominees€for€a€newly€created€director€positionÐ à%0!$ Ðannounced€less€than€one€hundred€days€before€the€annual€meeting€to€be€given€to€the€directorsÐ ¸'#& Ðwithin€ten€days€of€the€public€announcement.€€Ð ° Ðà  àà ` àAs€to€the€Class€II€position,€the€ninety€day€requirement€of€Article€II,€ðð€12(a)(2)Ð ˆØ Ðapplies€as€the€default€rule€to€any€business€to€be€addressed€at€an€annual€meeting.€€Not€only€did€theÐ `° ÐAugust€15,€2003€proxy€statement€clearly€state€that€May€17,€2004€was€the€ninety€day€noticeÐ 8 ˆ Ðdeadline€for€the€2004€September€annual€meeting,€the€plaintiffs€knew€as€of€March€2004€that€theÐ  ` ÐClass€II€director€would€be€elected€in€September,€two€months€before€the€notice€deadline€expired.€Ð è 8  ÐThe€plaintiffs,€however,€failed€to€comply€with€the€notice€deadline€by€giving€Ô_ÔFoxbyÔ_Ô€notice€of€theÐ À  ÐShaker€nominees€on€August€4,€2004.€€Ð ˜è  Ðà  àà ` àAs€to€the€other€two€director€positions,€Class€I€and€Class€V,€the€ten€day€deadlineÐ pÀ Ðapplied.€€The€Class€I€position€became€open€when€the€director€resigned.€€Even€though€the€by„lawsÐ H˜ Ðdo€not€specifically€address€positions€opened€because€of€resignations,€a€corporation€must€notifyÐ  p Ðshareholders€of€the€annual€meeting€at€least€ten€days€beforehand.€€òòSeeóó€òòóóðð€2„504(a).€€The€CourtÐ øH Ðagrees€with€the€defendants€that€logically€the€ten€day€notice€provision€would€apply€to€this€directorÐ Ð  Ðposition.€€Similarly,€the€Class€V€position€was€a€newly€created€position,€hence,€the€ten€day€noticeÐ ¨ø Ðrequirement€of€Article€II,€ðð€12(a)(3)€applied.€€Plaintiffs€received€notice€of€the€Class€I€and€VÐ €Ð Ðposition€on€July€23,€2004.€€The€ten€day€deadline€expired€on€August€2,€but€plaintiff€Shaker€did€notÐ X ¨ Ðgive€notice€of€his€nominees€until€August€4.Ð 0"€  Ðà  àà ` àOn€the€basis€of€these€facts,€defendants€ask€this€Court€to€determine€that€the€ShakerÐ $X" Ðnominees€were€not€properly€before€the€meeting€for€voting€purposes.€€Therefore,€the€declaredÐ à%0!$ Ðresults€of€the€elections€in€favor€of€the€management€nominees€should€stand.€€Ð ¸'#& Ðà  àà ` àPlaintiffs€assert,€however,€that€the€facially€inoffensive€notice€provisions€wereÐ )à$( Ðenforced€in€this€case€in€a€discriminatory€fashion€for€the€purpose€of€benefitting€the€InvestmentÐ h+¸&* ÐManager,€at€the€expense€of€the€shareholders.€€To€support€this€contention,€they€point€to€the€factÐ ° Ðthat€the€proxies€submitted€by€plaintiff€Shaker€were€received€and€counted€for€purposes€ofÐ ˆØ Ðestablishing€a€quorum€for€the€meeting€(which€would€not€have€existed€without€them),€but€theyÐ `° Ðwere€not€counted€for€any€voting€purposes€at€the€meeting.€€Additionally,€plaintiffs€note€that€theÐ 8 ˆ Ðmanagement„controlled€board€expended€considerable€sums€of€corporate€money€to€engage€in€aÐ  ` Ðproxy€fight€with€Plaintiff€Shaker€after€receiving€the€notices€which€defendants€now€insist€wereÐ è 8  Ðineffective.€€This,€they€argue,€constitutes€a€waiver€of€objection€and€evidence€that€the€directorsÐ À  Ðtreated€the€2004€election€as€contested.Ð ˜è  Ðà  àà ` àPlaintiffsðð€most€compelling€argument€is€that€the€by„law€notice€provisions€had€aÐ pÀ Ðdiscriminatory€impact€on€the€stockholders€as€they€were€applied€to€this€ð ðcontrol€of€the€boardððÐ H˜ Ðsituation.€€Although€plaintiff€Shaker€had€reason€to€know€that€a€Class€II€director€position€wasÐ  p Ðopen€two€months€prior€to€the€notice€deadline,€he€was€unlikely€to€engage€in€a€costly€proxy€fightÐ øH Ðwith€management€over€a€single€board€position.€€It€was€only€when€the€corporation€announced€inÐ Ð  Ðits€July€23,€2004€SEC€filing€that€two€other€director€positions€would€be€subject€to€vote€at€theÐ ¨ø Ðannual€meeting,€that€such€an€effort€to€seize€board€control€became€worthwhile.€€At€that€point,€theÐ €Ð Ðstockholders€had€only€ten€days€to€give€the€board€notice€of€any€alternative€candidate€slate.Ð X ¨ Ðà  àà ` àIn€an€analogous€situation,€where€management€attempted€to€advance€the€date€of€anÐ 0"€  Ðannual€meeting€to€ward€off€a€proxy€contest€with€dissident€stockholders,€the€Supreme€Court€ofÐ $X" ÐDelaware€ordered€that€the€new€meeting€date€be€nullified,€stating:Ð à%0!$ ÐÓÓà  àà ` àà ¸ àà  àIn€our€view,€those€conclusions€amount€toÐ ¸'#& Ðà  àà ` àà ¸ àa€finding€that€management€has€attempted€to€utilizeÐ ¤(ô#' Ðà  àà ` àà ¸ àthe€corporate€machinery€and€the€Delaware€Law€forÐ )à$( Ðà  àà ` àà ¸ àthe€purpose€of€perpetuating€itself€in€office;€and,Ð |*Ì%) Ðà  àà ` àà ¸ àto€that€end,€for€the€purpose€of€obstructing€the€Ð h+¸&* Ðà  àà ` àà ¸ àlegitimate€efforts€of€dissident€stockholders€inÐ ° Ðà  àà ` àà ¸ àthe€exercise€of€their€rights€to€undertake€a€proxyÐ œì Ðà  àà ` àà ¸ àcontest€against€management.Ð ˆØ ÐÌÓÓòòÔ_ÔSchnellÔ_Ô€v.€Chris„Craft€Indus.,€Inc.óó,€285€A.2d€437,€439€(Del.€1971).Ð `° Ðà  àà ` àA€more€recent€unpublished€opinion׃×Ý ƒ#ÃÝòòÚ  Ú3Ú  ÚóóÝ  Ý×  ×€by€the€Delaware€Chancery€Court€imposed€aÐ 8 ˆ Ðpreliminary€injunction€against€the€enforcement€of€an€advance€notice€by„law€requirement€whichÐ  ` Ðwould€have€deprived€shareholders€of€the€opportunity€to€nominate€a€dissident€slate€of€corporateÐ è 8  Ðdirectors.€€Relying€in€part€on€òòÔ_ÔSchnellÔ_Ô€v.€Chris„Craft€Indus.,€Inc.óó,€òòsupraóó,€and€òòÔ_ÔBlasiusÔ_Ô€Indus.,€Inc.€v.Ð À  ÐAtlas€Corp.óó,€564€A.2d€651€(Del.€Ch.€1988),€the€court€addressed€a€fact€pattern€where€the€boardÐ ˜è  Ðhad€taken€no€affirmative€action€to€thwart€the€shareholder€challenge,€but€merely€declined€to€waiveÐ pÀ Ðthe€by„law€requirement€of€notice€in€advance€of€the€annual€shareholdersðð€meeting.€€The€DelawareÐ H˜ Ðcourt€said:Ð  p ÐÓÓà  àà ` àà ¸ à...€the€case„by„case€development€of€the€laws€Ð øH Ðà  àà ` àà ¸ àgoverning€fiduciary€obligations€„€a€processÐ ä4 Ðà  àà ` àà ¸ àthat€is€integral€to€our€common€lawÐ Ð  Ðà  àà ` àà ¸ àtradition€„€cannot€be€constrained€by€so€facileÐ ¼  Ðà  àà ` àà ¸ àa€distinction.€€From€a€semantic€and€evenÐ ¨ø Ðà  àà ` àà ¸ àlegal€viewpoint,€ð ðinactionðð€and€ð ðactionððÐ ”ä Ðà  àà ` àà ¸ àmay€be€substantive€equivalents,€differentÐ €Ð Ðà  àà ` àà ¸ àonly€in€form.€€Morever,€occasions€do€ariseÐ l¼ Ðà  àà ` àà ¸ àwhere€board€inaction,€even€where€notÐ X ¨ Ðà  àà ` àà ¸ àinequitable€in€purpose€or€design,€mayÐ D!” Ðà  àà ` àà ¸ ànonetheless€operate€inequitably.€€If€thatÐ 0"€  Ðà  àà ` àà ¸ àoccurs,€it€cannot€tenably€be€maintainedÐ #l! Ðà  àà ` àà ¸ àthat€equity€is€without€power€to€grantÐ $X" Ðà  àà ` àà ¸ àrelief€to€an€aggrieved€party€in€an€appropriateÐ ô$D # Ðà  àà ` àà ¸ àcase.Ð à%0!$ ÐÌòòÔ_ÔR.D.Ô_Ô€Ô_ÔHubbardÔ_Ô€v.€Hollywood€Park€Realty€Enterprises,€Inc.óó,€1991€WL€3151€(Del.€Ch.),€17€Del.€J.Ð ¸'#& ÐCorp.€L.€238,€257.€Ð ° ÐÌÓÓà  àà ` àFor€at€least€a€half€century,€the€Maryland€courts€have€exercised€their€equityÐ ˆØ Ðjurisdiction€to€consider€whether€corporate€by„laws€were€invalid€under€our€law,€as€unreasonableÐ `° Ðwhen€applied€to€challenges€to€the€control€of€corporate€boards€of€directors.€€òòRoland€Pk.€Shop.Ð 8 ˆ ÐCenter€v.€Ô_ÔHendlerÔ_Ôóó,€206€Md.€10,€24€(1954).€€Other€Maryland€cases€have€addressed€directorsððÐ  ` Ðactions€taken€to€ensure€their€continued€control,€òòMtge.€Board€Ô_ÔAssððnÔ_Ô€v.€Bakeróó,€157€Md.€309,€321Ð è 8  Ð(1929)€and€scrutinized€directorsðð€actions€for€fairness€applying€the€fiduciary€duty€rule,€òòCummingsÐ À  Ðv.€United€Artistsóó,€237€Md.€1,€24„25€(1964)€(although€not€deciding€whether€to€apply€fiduciary€dutyÐ ˜è  Ðrule€or€less€stringent€business€judgment€rule).Ð pÀ Ðà  àà ` àThis€Court€believes€that€Maryland€law€provides€the€same€protection€toÐ H˜ Ðshareholder€voting€rights€that€obtains€in€Delaware,€in€similar€factual€contexts,€such€as€the€presentÐ  p Ðone€involving€a€proxy€fight€over€control€of€the€board.€€òòCf.óó€òòBrown€v.€Ô_ÔMcLanahanÔ_Ôóó,€148€F.2d€703,Ð øH Ð708€(4òòthóó€Cir.€1945).€€Assuming€the€truth€of€plaintiffsðð€allegations€for€purposes€of€the€presentÐ Ð  Ðmotion,€plaintiff€Shaker€took€appropriate€actions€to€notify€the€directors€and€the€SEC€of€his€intentÐ ¨ø Ðto€challenge€the€management€nominees€with€his€own€slate.€€The€board€reacted€by€engaging€in€aÐ €Ð Ðcontest€for€shareholder€proxies,€which€would€have€been€unsuccessful,€except€for€the€invocationÐ X ¨ Ðof€the€notice€provisions€in€the€amended€by„laws.€€Thus,€under€the€circumstances€of€this€case,€theÐ 0"€  ÐCourt€finds€that€the€application€of€the€notice€provisions€brings€this€action€within€the€equitableÐ $X" Ðpowers€of€the€Court€to€determine€whether€defendants€breached€their€fiduciary€duties€to€theÐ à%0!$ Ðshareholders€by€enforcing€unreasonable€or€discriminatory€by„law€provisions€against€plaintiffs.€òòóóÐ ¸'#& ÐÔ#†X/LXXX/L#Ôòòóóà@Ó Ó ìàII.€€The€Other€Challenged€By„Law€ProvisionsˆÐ )à$( Ðà  àà ` àPlaintiffs€allege€that€the€by„law€amendments€adopted€by€the€board€of€directorsÐ h+¸&* Ðsince€2002€have€as€their€sole€purpose€the€destruction€of€shareholder€voting€rights€and€theÐ ° Ðprevention€of€meaningful€challenges€to€board€control€by€the€Investment€Manager׃ ×Ý ƒ#ÃÝòòÚ  Ú4Ú  ÚóóÝ  Ý×  ×€and€itsÐ ˆØ Ðaffiliates.€€Plaintiffs€further€allege€that€the€Investment€Manager€is€motivated€to€control€the€boardÐ `° Ðin€order€to€protect€its€lucrative€fees€as€a€return€on€its€$425,000€purchase€of€the€investmentÐ 8 ˆ Ðadvisory€agreement.à ¸ àà  àà h àà À àà  àà p àà È àà  àÐ  ` Ðà  àà ` àThe€remaining€by„law€amendments€which€plaintiffs€seek€to€have€declared€null€andÐ è 8  Ðvoid€can€be€characterized€as€ð ðqualificationðð€and/or€ð ðÔ_ÔsupermajorityÔ_Ôðð€by„laws,€as€well€as€a€by„lawÐ À  Ðpurporting€to€limit€judicial€review€of€board€election€results.€€Plaintiffs€contend€that€these€by„lawÐ ˜è  Ðamendments€constitute€unlawful€interference€with€the€shareholder€franchise€and€a€violation€ofÐ pÀ Ðthe€boardððs€fiduciary€duties€as€prescribed€by€Maryland€law.Ð H˜ Ðà  àà ` àOn€these€issues€the€Court€is€not€helped€particularly€by€the€partiesðð€opposingÐ  p Ðinterpretations€of€Marylandððs€statutory€scheme€for€electing€and€qualifying€directors.€€BothÐ øH Ðpositions€beg€the€question.€€Plaintiffs€cite€ðð€2„404(b)(1)(Ô_ÔiÔ_Ô)€to€assert€that€the€determination€ofÐ Ð  Ðdirector€qualification€arises€only€after€their€election.€€Defendants€cite€ðð€2„403€to€support€theirÐ ¨ø Ðcontention€that€director€qualifications€are€properly€established€by€charter€or,€as€in€this€case,€byÐ €Ð Ðcorporate€by„law.€€But€the€Complaint€alleges€that,€these€matters€notwithstanding,€theÐ X ¨ Ðð ðqualificationðð€by„law,€the€ð ðÔ_ÔsupermajorityÔ_Ôðð€by„law€and€the€ð ðjudicial€reviewðð€by„law,€as€amended,Ð 0"€  Ðare€unreasonable€and€impermissibly€impact€shareholder€voting€rights.€€(Ô_ÔComplÔ_Ô.€ðððð€34„37€and€52„Ð $X" Ð54.)Ð à%0!$ ÐÔ_Ôà  àà ` àNeither€party€disputes€the€right€of€stockholders€to€elect€directors€at€annualÐ ° Ðmeetings€under€Maryland€law.€€ðð€2„404(b).€€The€next€logical€questions€then€are€what€duty€theÐ ˆØ Ðcorporation€has€to€ensure€fair€voting€procedures€and€by€whom€and€how€those€procedures€may€beÐ `° Ðchallenged.€€A€leading€case€from€the€Delaware€Chancery€Court€holds€that€even€unintendedÐ 8 ˆ Ðviolations€of€shareholder€voting€rights€are€actionable.€€òòBlasius€Indus.,€Inc.€v.€Atlas€Corp.óó,€òòsupraóó,Ð  ` Ð564€A.2d€651€(Del.€Ch.€1988).Ð è 8  Ðà  àà ` àThe€òòBlasiusóó€decision€cites€an€earlier€Delaware€case€in€which€board€action€wasÐ À  Ðenjoined€for€interference€with€shareholder€voting€rights€and€quotes€it€as€follows:Ð ˜è  ÐÓÓà  àà ` àà ¸ àà  àThe€corporate€election€process,€if€it€is€toÐ pÀ Ðà  àà ` àà ¸ àhave€any€validity,€must€be€conducted€with€scrupulousÐ \¬ Ðà  àà ` àà ¸ àfairness€and€without€any€advantage€being€conferred€orÐ H˜ Ðà  àà ` àà ¸ àdenied€to€any€candidate€or€slate€of€candidates.€€In€theÐ 4„ Ðà  àà ` àà ¸ àinterests€of€corporate€democracy,€those€in€charge€ofÐ  p Ðà  àà ` àà ¸ àthe€election€machinery€of€a€corporation€must€be€heldÐ  \ Ðà  àà ` àà ¸ àto€the€highest€standards€of€providing€for€and€conductingÐ øH Ðà  àà ` àà ¸ àcorporate€elections.€€The€business€judgment€ruleÐ ä4 Ðà  àà ` àà ¸ àtherefore€does€not€confer€any€presumption€ofÐ Ð  Ðà  àà ` àà ¸ àpropriety€on€the€acts€of€directors€....Ð ¼  ÐÌÓÓòòAprahamian€v.€HBO€&€Companyóó,€531€A.2d€1204€(Del.€Ch.€1987).€€While€neither€plaintiffs׃×Ý ƒ#ÃÝòòÚ  Ú5Ú  ÚóóÝ  Ý×  ×€norÐ ”ä Ðdefendants€have€found€significant€Maryland€authority€on€this€point,€the€Court€is€persuaded€thatÐ l¼ Ðthe€Maryland€courts€would€recognize€shareholder€voting€rights€as€having€the€same€or€similarÐ D!” Ðstatus€as€recognized€by€the€Delaware€cases.Ð #l! Ðà  àà ` àIndeed,€defendants€do€not€appear€to€cavil€with€the€notion€that€a€stockholder€mayÐ ô$D # Ðsue€to€enforce€his€or€her€voting€rights.€€But€they€take€strong€issue€with€the€entitlement€of€plaintiffÐ Ì&"% ÐShaker€to€bring€this€action€directly€rather€than€derivatively€in€the€name€of€the€corporation.€€ForÐ ¤(ô#' Ðthis€proposition€defendants€rely€on€the€ð ðspecial€injuryðð€requirement€which€was€until€recently€aÐ ° Ðpart€of€the€analysis€of€direct€versus€derivative€claims€contained€in€the€Delaware€decisional€law.€Ð ˆØ ÐòòBut€see€Tooley€v.€Donaldson,€Lufkin€&€Jenrette,€Inc.óó,€845€A.2d€1031,€1035„36€(Del.€2004).€€ThatÐ `° Ðanalysis,€even€if€it€has€any€continuing€support€in€Maryland€decisions,€is€not€persuasive€hereÐ 8 ˆ Ðbecause€the€parties€are€unable€to€articulate€any€corporate€harm€occasioned€by€the€adoption€of€theÐ  ` Ðchallenged€by„law€amendments.€€To€the€contrary,€defendants€insist€that€these€amendments€wereÐ è 8  Ðnecessary€to€protect€this€closed„end€investment€company€from€the€kind€of€seizure€of€control€andÐ À  Ðconversion€to€an€open„end€fund€which€plaintiffs€attempted€in€this€case.€€Plaintiffs€do€not€contendÐ ˜è  Ðthat€the€corporation€suffered€any€injury.€€The€òòonlyóó€injury€in€this€situation,€if€any,€was€to€plaintiffÐ pÀ ÐShakerððs€right€to€participate€in€a€corporate€election€pursuant€to€by„laws€consistent€with€law.€Ð H˜ Ððð€2„110.€€This€clearly€suggests€that€plaintiff€Shaker€is€entitled€to€pursue€this€cause€of€actionÐ  p Ðdirectly.à ` àÐ øH Ðà  àà ` àDefendants€contend€that€directors€of€a€Maryland€corporation€do€not€owe€fiduciaryÐ Ð  Ðduties€to€stockholders€and€that€the€duties€they€owe€are€solely€to€the€corporation,€as€prescribed€in€Ð ¨ø Ððð€2„405.1,€which€by€its€terms€limits€enforcement€to€derivative€actions€on€behalf€of€theÐ €Ð Ðcorporation.€€In€the€present€context€of€shareholder€voting€rights,€however,€this€cannot€be€the€case.€Ð X ¨ ÐDespite€the€lack€of€Maryland€decisional€law€on€this€point,€plaintiffsðð€claim€raises€a€fundamentalÐ 0"€  Ðissue€of€corporate€governance.€€As€the€Delaware€Chancery€Court€said€in€òòBlasiusóó:Ð $X" ÐÓÓà  àà ` àà ¸ àThe€shareholder€franchise€is€the€ideologicalÐ à%0!$ Ðà  àà ` àà ¸ àunderpinning€upon€which€the€legitimacy€ofÐ Ì&"% Ðà  àà ` àà ¸ àdirectorial€power€rests€...€Thus,€when€viewedÐ ¸'#& Ðà  àà ` àà ¸ àfrom€a€broad,€institutional€perspective,€it€canÐ ¤(ô#' Ðà  àà ` àà ¸ àbe€seen€that€matters€involving€the€integrity€ofÐ )à$( Ðà  àà ` àà ¸ àthe€shareholder€voting€process€involveÐ |*Ì%) Ðà  àà ` àà ¸ àconsiderations€not€present€in€any€other€contextÐ h+¸&* Ðà  àà ` àà ¸ àin€which€directors€exercise€delegated€power€...Ð ° Ðà  àà ` àà ¸ àa€decision€by€the€board€to€act€for€the€primaryÐ œì Ðà  àà ` àà ¸ àpurpose€of€preventing€the€effectiveness€of€aÐ ˆØ Ðà  àà ` àà ¸ àshareholder€vote€inevitably€involves€theÐ tÄ Ðà  àà ` àà ¸ àquestion€who,€as€between€the€principal€andÐ `° Ðà  àà ` àà ¸ àthe€agent,€has€authority€with€respect€to€aÐ L œ Ðà  àà ` àà ¸ àmatter€of€internal€corporate€governance.Ð 8 ˆ ÐÌÓÓòòBlasius€Indus.,€Inc.óó,€564€A.2d€at€659„60.Ð  ` Ðà  àà ` àThis€Court€believes€that€the€directors€owed€plaintiff€a€statutory€and€common€lawÐ è 8  Ðduty€to€enact€by„laws€containing€fair€voting€procedures.€€Whether€they€did€that€in€this€caseÐ À  Ðpresents€factual€questions€that€cannot€be€resolved€on€the€record€now€before€the€Court.€€TheÐ ˜è  Ðreasonableness€and/or€the€discriminatory€effect€of€the€by„law€amendments€in€question€raiseÐ pÀ Ðmixed€questions€of€law€and€fact,€better€resolved€following€discovery.€€Md.€Rule€2„322(c).€€òòCf.,Ð H˜ ÐMountain€Manor€Realty€v.€Buccherióó,€55€Md.€App.€185,€199€(1983).Ð  p Ðà  àà ` àAccordingly,€defendantsðð€motion€to€dismiss€or€to€grant€summary€judgment€will€beÐ øH Ðdenied.Ð Ð  ÐÌÌÓÓà  àà ` àà ¸ àà  àà h àà À àà  àòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÐ X ¨ Ðà  àà ` àà ¸ àà  àà h àà À àà  àALBERT€J.€MATRICCIANI,€JR.Ð D!” Ðà  àà ` àà ¸ àà  àà h àà À àà  àJudgeÐ 0"€  Ðcc:à0  àJohn€B.€Isbister,€EsquireÐ#l!(#(# Ðà  àJaime€W.€Luse,€EsquireÐ $X" ÐÌà  àGregory€E.€Keller,€Esquireà0 h àà0Àh(#h(#àà0À(#À(#àÐà%0!$(#(# ÐÌà  àG.€Stewart€Webb,€Jr.,€Esquire