CA Shareholders Seek Board Minutes

A shareholder movement wants to see when directors knew of accounting fraud.
Publish date:

Updated from 5:37 p.m. EDT

Shareholders of

Computer Associates

(CA) - Get Report

are demanding access to seven years of board minutes and related matters in an effort to determine if sitting directors were diligent in their attempts to avert the $2.2 billion accounting scandal that badly tarnished the company.

"Eight of the directors had been responsible for oversight in the period they now admit there was serious criminal misconduct," said Gary Lutin, an investment banker who is running an informational forum for CA shareholders. "Shareholders need an independent review of the performance of directors who are nominating themselves for re-election."

CA's board is expected to run unopposed and be easily re-elected when the giant software company holds its annual meeting on Aug. 24.

Citing federal regulations that prohibit the selective disclosure of material information, CA has refused do release the records. The company also says that just two of the sitting directors were present when the illegal premature booking of revenue actually occurred.

But Lutin and corporate governance advocates maintain that under the law in Delaware, where CA and many other corporations are incorporated, shareholders have the right to view "books and records," as Section 220 of the Delaware General Corporation Law calls them, including corporate minutes.

"It would be a real challenge to convince a Delaware court that none of these records should be turned over," says Beth Young, a senior research associate with the Corporate Library.

The shareholder forum has been seeking the records for some time; the latest demand -- made Monday -- escalates the matter by citing Delaware law and implicitly threatening court action.

When asked in May to release the documents, Kenneth Handal, the company's general counsel, said that although he believed the "selective disclosure" would be improper, he said that other related information would be forthcoming. "CA presently is cooperating with the Department of Justice and the SEC in connection with ongoing investigations of certain former members of management. To the extend appropriate, the company will make additional information available to shareholders bearing on

their conduct," Handal wrote.

A CA spokesperson said Monday that the company was reviewing the shareholders' request.

For his part, Lutin said he understood there may be sensitive information in requested documents and said he is willing to work with the company and set up a procedure that would protect confidential information.

Separately, CA on Monday said it acquired Tiny Software, a privately held developer of security technology for Windows desktops and servers, for an undisclosed cash amount.

CA also said it may formally change it name from Computer Associates, to "CA" and may also alter its logo. "I can see this as the first baby step," Don Friedman, CA's chief marketing officer, told


. "We are trying to change the conversations and the perception of CA."