Gevo Seeks Validation for Potentially Defective Corporate Acts

By Tamara Parker • Thursday, January 16 06:08 • Permanent Link

Gevo, Inc. ("Gevo" or the "Company") has filed a petition in the Court of Chancery of the State of Delaware seeking relief pursuant to 8 Del. C. § 205 to validate potentially defective corporate acts related to stockholder votes at two specific annual stockholder meetings.

The 2013 Annual Meeting saw Gevo stockholders approve an amendment to its certificate of incorporation to increase the number of authorized shares of common and preferred stock. The 2013 Increase Proposal sought to increase the number of authorized shares of common stock from 100,000,000 to 150,000,000 and the number of authorized shares of preferred stock from 5,000,000 to 10,000,000.

Following the 2013 Annual Meeting, Gevo and its Board of Directors treated the approval of the 2013 Increase Proposal as valid. Third parties also treated the approval of the 2013 Increase Proposal as valid, including third parties who subsequently purchased Gevo common stock through public offerings.

Moving on to the 2014 Annual Meeting, the Company proposed an increase in the number of authorized shares of common stock from 150,000,000 to 250,000,000. Similar to the 2013 Increase Proposal, votes cast by nominees/brokers in favor of the 2014 Increase Proposal without instruction from the beneficial owners of certain outstanding shares were counted in favor of the proposal.

The petition filed by Gevo states that a recent stockholder demand regarding the stockholder votes at the 2013 and 2014 Annual Meetings questioned the validity of the Amendments, leading to uncertainty regarding their legitimacy and potentially endangering the Company’s financial stability and status as a public company.

Gevo believes stockholder ratification pursuant to 8 Del. C. § 204 is impracticable due to the operation of the public securities market and the nature of beneficial ownership. The Company currently has approximately 239 million common shares outstanding, a majority of which were authorized by the Amendments, making it difficult to conduct a vote of the holders of a majority of the voting power of its stock that are not shares approved in the Amendments.

The market has reacted to these announcements by moving the company's shares 5.7% to a price of $2.21. For more information, read the company's full 8-K submission here.

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