October 11, 2005 – Investors File Suit After Reincorporation
October 11, 2005
JInvestors of News Corp., which includes large American, European and Australian pension funds, have filed suit against Rupert Murdoch and a dozen officers and directors alleging fraud, breach of contract, negligent misrepresentation and breach of fiduciary duty. The investors alleged that in conjunction with the company’s transcontinental reincorporation in Delaware, Murdoch and the officers and directors of News Corp. promised shareholders that the company would not adopt a poison pill lasting more than one year without express shareholder approval.
However, less than one year after its reincorporation in Delaware, Murdoch and the News Corp. directors unilaterally approved a two-year extension of a temporary “poison pill” provision. The poison pill limits the amount of stock an investor can acquire in the company without the consent of its board. The investors currently seek a preliminary injunction that would prevent the defendants from extending the poison pill past its November 8 expiration date without shareholder approval.