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CommonWealth REIT (NYSE:CWH) today announced the CWH Board of Trustees has confirmed its commitment to best in class governance by permanently waiving the option to classify its Board under provisions of the Maryland Unsolicited Takeover Act, or MUTA, unless approved by a majority of common shares outstanding. The resolution includes the following:
“NOW THEREFORE IT IS HEREBY RESOLVED, that, pursuant to Section 3-802(c) of the Maryland General Corporation Law (the “MGCL”), the Company is hereby prohibited from electing to be subject to the provisions of Section 3-803 or otherwise providing for the Trustees of the Company to be divided into classes pursuant to Title 3, Subtitle 8 of the MGCL, and further provided that the foregoing prohibition may not be repealed unless the repeal of such prohibition, or the classification of the Trustees pursuant to Section 3-803, is approved by the holders of at least a majority of the issued and outstanding shares of beneficial interest in the Company that would be entitled to vote thereon;”
A copy of the Articles Supplementary adopted by the Board and filed with the State Department of Assessments and Taxation of Maryland making this resolution effective will be filed with the Securities and Exchange Commission.
As announced last year, the CWH Board has endorsed, and will submit to a shareholder vote at the June 2014 annual shareholders’ meeting, an amendment to CWH’s Declaration of Trust to allow for the de-classification of the Board and the annual election of all Trustees. To facilitate this change, last year CWH opted-out of MUTA provisions which allow for classifying the Board. The action announced today permanently precludes the CWH Board from opting-in to these provisions of MUTA without shareholder approval.
Adam Portnoy, President and Managing Trustee of CWH, made the following statement regarding today’s announcements:
“The Board’s actions to permanently waive its right to classify itself under Maryland law demonstrate our commitment to best in class corporate governance and confirm that CWH’s many corporate governance enhancements are irreversible and sincere.”