Saba Capital Management Challenges BlackRock's Governance
Saba Capital Management Challenges BlackRock's Governance Approach
Saba Capital Management has taken legal action to halt BlackRock Inc.'s use of a bylaw that it alleges denies investor rights. This move aims to enforce greater shareholder democracy and could lead to increased scrutiny of similar practices in the industry. The dispute centers on the governance of one of BlackRock's closed-end funds and could potentially reshape governance in investment funds.
Key Takeaways
- Saba Capital Management seeks to block BlackRock's use of a bylaw that allegedly denies investor rights.
- BlackRock's tactic keeps un-elected trustees in their positions indefinitely, according to Saba, circumventing federal election requirements.
- Federal law mandates that two-thirds of a board must be elected at an annual shareholders' meeting, challenging BlackRock's approach.
Analysis
Saba Capital Management's legal challenge against BlackRock's bylaw usage could reshape governance in investment funds. By alleging that BlackRock's bylaw circumvents federal election requirements, Saba aims to enforce greater shareholder democracy. This could disrupt BlackRock's operations and investor relations in the short term and lead to increased scrutiny of similar industry practices.
Did You Know?
- Closed-End Funds: A type of investment company that issues a fixed number of shares that trade on an exchange. Unlike open-end funds, closed-end funds do not stand ready to issue and redeem shares on a continuous basis.
- Bylaws: These are the internal rules governing the operations of a corporation, including the powers, duties, and responsibilities of its officers and directors.
- Federal Law on Board Elections: Refers to regulations that stipulate how corporate boards should be structured and how directors are elected.