News & Events

Corporate Partner Ryan Brizek was quoted in an article published by Fund Board Views titled, “Mass. Superior Court favors Eaton Vance CEFs in Saba fight.” The article provided an overview of the recent decision in Massachusetts Superior Court upholding a bylaw adopted by listed closed-end funds advised by Eaton Vance that requires a nominee for election to the fund’s board to receive the affirmative vote of a majority of the fund’s shares outstanding and entitled to vote in order to be elected by shareholders in a contested election (the “Majority Vote Bylaw”). In upholding the Majority Vote Bylaw, the court declared that it does not violate Section 18(i) of the 1940 Act or the fund’s declaration of trust. As the first decision to recognize that a Majority Vote Bylaw does not violate Section 18(i), Ryan explained that the decision establishes “the proposition that a vocal minority cannot force its will on the majority [of shareholders].”

With respect to the fund board’s process, the judge expressed the view that the board members “acted in what they considered to be the best interests of the Funds given the Funds’ investment strategies and the possibility that activist investors could cause transformational change to the Funds to the detriment of retail and non-activist institutional investors.” When discussing this statement, Ryan noted that “[t]he important fact is that the board had a robust process in place where it took in relevant information over the course of multiple meetings, and as a result [the board’s process and due diligence exhibited to the judge that the board] was acting with business judgment.”

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