Cubic Plans to Reincorporate in Delaware

Seeking to thwart unfriendly takeovers, Cubic Corp. will reincorporate in Delaware, where laws protecting firms from hostile corporate suitors are more stringent than in California.

The proposal, contained in the defense and electronics company’s proxy statement and mailed to shareholders last Friday, requires the approval of Cubic shareholders, who will vote on the issue at the company’s annual meeting Feb. 12.

The major difference between the two states’ corporation laws is California’s cumulative shareholder voting provision, which allows stockholders to cast their voting shares in blocks behind their candidates for director.

Under cumulative voting in a firm with 10 directors, for example, a stockholder with 100 shares has 100 votes per director, which can be cast however the stockholder wishes. One director could receive all 1,000 votes, making it easier for dissident or “unfriendly” shareholders to elect one or more directors.

Delaware law does not require cumulative voting.

Cubic officials, arguing for the proposal in the proxy, said that there is no known bid by any outside parties to make a tender offer for the firm.