In a recent post, Professor Ann Lipton noted a proposed charter amendment intended to address the so-called "Con Ed" problem. In Consol. Edison, Inc. v. Ne. Utilities, 426 F.3d 524 (2d Cir. 2005), the stockholders of Northeast Utilities sued Consolidated Edison for the $1.2 billion premium that Consolidated Edison would have paid had the deal closed. The Court of Appeals concluded that the Northeast Utilities’ stockholders lacked third-party beneficiary status to enforce the merger agreement because the merger agreement included a no third party beneficiaries clause.

The charter amendment would provide that for the appointment of the company as the stockholders' agent for the purpose seeking damages should specific performance not be sought or obtained for the acquirer's fraud or material and willful breach of the merger agreement. Because the stockholders do not sign the charter amendment, this engenders for me the question of the enforceability of an unsigned agency agreement (see yesterday's post). The answer to that question would seem to depend upon the law governing the contract of agency, which in turn would seem to depend upon agency choice of law principles. See Should a Proxy Card Specify A Choice of Law?