Village corporation failure to provide annual reports and hold annual meetings; board of directors fiduciary duties.
Plaintiffs have moved for summary judgment on counts II and III of their complaint. These two counts allege that the defendants failed to prepare and distribute annual reports. Plaintiffs rely on AS 10.06.433 for their proposition that they should be awarded penalties for the corporation’s failure to provide annual reports for certain years between 1999 and 2004. Alaska Statute 10.06.433(f) provides that “[a] corporation that neglects, fails, or refuses to prepare or submit” an annual report is subject to a penalty of $25 per day with a maximum penalty of $1500. (Emphasis added.)The lead plaintiff in this case, Erickson, made a demand on the corporation for missing annual reports in August of 2004, and in October of 2004 filed suit against three of the corporation’s directors. Subsequently, numerous other shareholders have joined the suit as plaintiffs. The plaintiffs now seek penalties from the named directors for failing to send out annual reports. Plaintiffs argue that the defendant directors should be liable for penalties for failing to prepare and provide annual reports essentially based on the status of a corporation as a legal fiction. They argue that the corporation cannot act without some action by the board and therefore the board and its directors are liable for the corporation’s actions or inactions.The defendants oppose the motion, arguing that any penalties for such a failure to provide annual reports are the obligation of the corporation and not the individual directors.
Clarifies what shareholder communications and voting-related conduct trigger (or don�t trigger) regulatory and corporate-law requirements.