Pursuant to our amended and restated certificate of incorporation, our
authorized capital stock consists of 4,350,000,000 shares, each with a par value
of $0.01 per share, of which:
The shareholders' agreement contains provisions relating to the voting
and disposition of certain shares of common stock. See "Certain Relationships
and Related Transactions Shareholders' Agreement" for a discussion of those
provisions.
Our authorized capital stock includes 150,000,000 shares of preferred
stock. Our board of directors is authorized to divide the preferred stock into
series and, with respect to each series, to determine the designations and the
powers, preferences and rights, and the qualifications, limitations and
restrictions thereof, including the dividend rights, conversion or exchange
rights, voting rights, redemption rights and terms, liquidation preferences,
sinking fund provisions and the number of shares constituting the series. Our
board of directors could, without shareholder approval, issue preferred stock
with voting and other rights that could adversely affect the voting power of the
holders of common stock and which could have certain anti-takeover effects.
Subject to the rights of the holders of any series of preferred stock,
the number of authorized shares of any series of preferred stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by resolution adopted by our board of directors and approved by the
affirmative vote of the holders of a majority of the voting power of all
outstanding shares of capital stock entitled to vote on the matter, voting
together as a single class.
Each holder of common stock is entitled to one vote for each share
owned of record on all matters submitted to a vote of shareholders. There are no
cumulative voting rights. Accordingly, the holders of a majority of the shares
of common stock voting for the election of directors can elect all the directors
if they choose to do so, subject to any voting rights of holders of preferred
stock to elect directors. For a discussion of the ability of the parties to the
shareholders' agreement initially to elect all of our directors, see "Risk
Factors Goldman Sachs Will Be Controlled by Its Managing Directors Whose
Interests May Differ from Those of Other Shareholders".
Subject to the preferential rights of any holders of any outstanding
series of preferred stock, the holders of common stock, together with the
holders of the nonvoting common stock, will be entitled to such dividends and
distributions, whether payable in cash or otherwise, as may be declared from
time to time by our board of directors from legally available funds. Subject to
the preferential rights of holders of any outstanding series of preferred stock,
upon our liquidation, dissolution or winding-up and after payment of all prior
claims, the holders of common stock, with the shares of the common stock and the
nonvoting common stock being considered as a single class for this purpose, will
be entitled to receive pro rata all our assets. Any dividend in shares of common
stock paid on or with respect to shares of common stock may be paid only with
shares of common stock. Other than the shareholder protection rights discussed
below, holders of common stock have no redemption or conversion rights or
preemptive rights to purchase or subscribe for securities of Goldman Sachs.
The nonvoting common stock will have the same rights and privileges as,
and will rank equally and share proportionately with, and be identical in all
respects as to all matters to, the common stock, except that the nonvoting
common stock will have no voting rights other than those voting rights required
by law. All of the outstanding shares of nonvoting common stock will be
beneficially owned by Sumitomo Bank Capital Markets, Inc. on the date of the
consummation of the offerings.
Our board of directors will not declare or pay dividends, and no
dividend will be paid, with respect to any outstanding share of common stock or
nonvoting common stock, unless, simultaneously, the same dividend is paid with
respect to each share of common stock and nonvoting common stock, except that in
the case of any dividend in the form of capital stock of a subsidiary of Goldman
Sachs, the capital stock of the subsidiary distributed to holders of common
stock may differ from the capital stock of the subsidiary distributed to holders
of the nonvoting common stock to the extent and only to the extent that the
common stock and the nonvoting common stock differ. Any dividend paid on or with
respect to nonvoting common stock may be paid only with shares of nonvoting
common stock.
The shares of nonvoting common stock may not be converted into common
stock until the 185th day after the date of the consummation of the offerings.
Beginning on the 185th day the nonvoting common stock will, upon transfer by
Sumitomo Bank Capital Markets, Inc. to a third party, and in certain other
circumstances, convert into shares of common stock on a one-for-one basis. The
nonvoting common stock has standard anti-dilution provisions.
Each share of common stock and non-voting common stock has attached to
it a shareholder protection right. The shareholder protection rights initially
are represented only by the certificates for the shares and will not trade
separately from the shares unless and until:
Upon the date of the announcement by Goldman Sachs that any person or
group has become an acquiring person, each shareholder protection right (other
than shareholder protection rights beneficially owned by the acquiring person or
their transferees, which shareholder protection rights become void) will entitle
its holder to purchase, for the exercise price, a number of shares of common
stock or, in the case of shareholder protection rights relating to nonvoting
common stock, a number of shares of nonvoting common stock having a market value
of twice the exercise price. Also, if, after the date of the announcement by
Goldman Sachs that any person has become an acquiring person, the acquiring
person controls our board of directors and:
The shareholder protection rights may be redeemed by our board of
directors for $0.01 per shareholder protection right prior to the date of the
announcement by Goldman Sachs that any person has become an acquiring person.
Our charter permits this redemption right to be exercised by our board of
directors (or certain directors specified or qualified by the terms of the
instrument governing the shareholder protection rights).
The shareholder protection rights will not prevent a takeover of
Goldman Sachs. However, these rights may cause substantial dilution to a person
or group that acquires 15% or more of the common stock unless the shareholder
protection rights are first redeemed by our board of directors.
Our charter provides that a director of Goldman Sachs will not be
liable to Goldman Sachs or its shareholders for monetary damages for breach of
fiduciary duty as a director, except in certain cases where liability is
mandated by the Delaware General Corporation Law. Our by-laws provide for
indemnification, to the fullest extent permitted by law, of any person made or
threatened to be made a party to any action, suit or proceeding by reason of the
fact that such person is or was a director or officer of Goldman Sachs, or is or
was a director of a subsidiary of Goldman Sachs, or is or was a member of the
Shareholders' Committee acting under the shareholders' agreement or, at the
request of Goldman Sachs, serves or served as a director or officer of or in any
other capacity for, or in relation to, any other enterprise, against all
expenses, liabilities, losses and claims actually incurred or suffered by such
person in connection with the action, suit or proceeding. Our by-laws also
provide that, to the extent authorized from time to time by our board of
directors, Goldman Sachs may provide to any one or more employees and other
agents of Goldman Sachs or any subsidiary or other enterprise, rights of
indemnification and to receive payment or reimbursement of expenses, including
attorneys' fees, that are similar to the rights conferred by the by-laws on
directors and officers of Goldman Sachs or any subsidiary or other
enterprise.
Our charter provides that our board of directors may determine to take
the following actions, in its sole discretion, and Goldman Sachs and each
shareholder of Goldman Sachs will, to the fullest extent permitted by law, be
deemed to have approved and ratified, and waived any claim relating to, the
taking of any of these actions:
Upon the consummation of the offerings, Goldman Sachs will be subject
to the provisions of Section 203 of the Delaware General Corporation Law. In
general, Section 203 prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. A "business combination" includes a merger, asset sale or a
transaction resulting in a financial benefit to the interested stockholder. An
"interested stockholder" is a person who, together with affiliates and
associates, owns (or, in certain cases, within three years prior, did own) 15%
or more of the corporation's outstanding voting stock. Under Section 203, a
business combination between Goldman
Sachs and an interested stockholder is prohibited unless it satisfies one of the
following conditions:
Our charter and by-laws will, upon consummation of the offerings,
include a number of provisions that may have the effect of encouraging persons
considering unsolicited tender offers or other unilateral takeover proposals to
negotiate with our board of directors rather than pursue non-negotiated takeover
attempts. These provisions include:
Classified Board of Directors
Our charter will provide for a board of directors divided into three
classes, with one class to be elected each year to serve for a three-year term.
The terms of the initial classes of directors will terminate on the date of the
annual meetings of shareholders in 2000, 2001 and 2002. As a result, at least
two annual meetings of shareholders may be required for the shareholders to
change a majority of our board of directors. In addition, the shareholders of
Goldman Sachs can only remove directors for cause by the affirmative vote of the
holders of not less than 80% of the outstanding shares of capital stock of
Goldman Sachs entitled to vote in the election of directors. Vacancies on our
board of directors may be filled only by our board of directors. The
classification of directors and the inability of shareholders to remove
directors without cause and to fill vacancies on the board of directors will
make it more difficult to change the composition of our board of directors, but
will promote a continuity of existing management.
Constituency Provision
In accordance with our charter, a director of Goldman Sachs may (but is
not required to) in taking any action (including an action that may involve or
relate to a change or potential change in control of Goldman Sachs) consider,
among other things, the effects that Goldman Sachs' actions may have on other
interests or persons (including its employees, former partners of The Goldman
Sachs Group, L.P. and the community) in addition to our shareholders.
Advance Notice Requirements
Our by-laws establish advance notice procedures with regard to
shareholder proposals relating to the nomination of candidates for election as
directors or new business to be brought before meetings of shareholders of
Goldman Sachs. These procedures provide that notice of such shareholder
proposals must be timely given in
writing to the Secretary of Goldman Sachs prior to the meeting at which the
action is to be taken. Generally, to be timely, notice must be received at the
principal executive offices of Goldman Sachs not less than 90 days nor more than
120 days prior to the first anniversary date of the annual meeting for the
preceding year. The notice must contain certain information specified in the
by-laws.
Special Meetings of Shareholders
Our charter and by-laws deny shareholders the right to call a special
meeting of shareholders. Our charter and by-laws provide that special meetings
of the shareholders may be called only by a majority of the board of
directors.
No Written Consent of Shareholders
Our charter requires all shareholder actions to be taken by a vote of
the shareholders at an annual or special meeting, and does not permit our
shareholders to act by written consent, without a meeting.
Majority Vote Needed for Shareholder Proposals
Our by-laws require that any shareholder proposal be approved by a
majority of all of the outstanding shares of common stock and not by only a
majority of the shares present at the meeting and entitled to vote. This
requirement may make it more difficult to approve shareholder resolutions.
Amendment of By-Laws and Charter
Our charter requires the approval of not less than 80% of the voting
power of all outstanding shares of Goldman Sachs' capital stock entitled to vote
to amend any by-law by shareholder action or the charter provisions described in
this section. Those provisions will make it more difficult to dilute the anti-takeover effects of our by-laws and our charter.
Blank Check Preferred Stock
Our charter provides for 150,000,000 authorized shares of preferred
stock. The existence of authorized but unissued shares of preferred stock may
enable the board of directors to render more difficult or to discourage an
attempt to obtain control of Goldman Sachs by means of a merger, tender offer,
proxy contest or otherwise. For example, if in the due exercise of its fiduciary
obligations, the board of directors were to determine that a takeover proposal
is not in the best interests of Goldman Sachs, the board of directors could
cause shares of preferred stock to be issued without shareholder approval in one
or more private offerings or other transactions that might dilute the voting or
other rights of the proposed acquiror or insurgent shareholder or shareholder
group. In this regard, the charter grants our board of directors broad power to
establish the rights and preferences of authorized and unissued shares of
preferred stock. The issuance of shares of preferred stock could decrease the
amount of earnings and assets available for distribution to holders of shares of
common stock and nonvoting common stock. The issuance may also adversely affect
the rights and powers, including voting rights, of such holders and may have the
effect of delaying, deterring or preventing a change in control of Goldman
Sachs. The board of directors currently does not intend to seek shareholder
approval prior to any issuance of shares of preferred stock, unless otherwise
required by law.
We will list the common stock on the NYSE.
The transfer agent for the common stock will be ChaseMellon Shareholder Services, L.L.C.
|