Opinion ID: 53575
Heading Depth: 4
Heading Rank: 2

Heading: Prohibition in REIT’s Declaration of Trust

Text: Hartman nevertheless contends in the alternative that the Board is prohibited by the REIT’s Declaration of Trust from opting in to the MUTA. This argument is without merit. The MUTA expressly authorizes a board, “notwithstanding any contrary provision in their charter or bylaws,” to opt for staggered boards,12 two-thirds voting requirement for the removal of trustees,13 and special meetings exclusively called by a majority of shareholders entitled to cast votes.14 Even though the MUTA does state that “[t]he charter of a corporation may contain a provision or the board of directors may adopt a resolution that prohibits the corporation from electing to be subject to any or all provisions of this subtitle” — and the REIT’s Declaration of Trust does expressly prohibit any amendment to the bylaws that adversely affects the rights of shareholders — the REIT’s general statement is not the sort of “provision” or “resolution” that is contemplated by this provision of the MUTA. The statute requires more than a mere general statement that might be interpreted to create some sort of conflict with the MUTA. It requires a specific resolution that, in effect, declares “no MUTA!” The REIT’s general proscription of any amendments that adversely affect the rights of shareholders is not the type of specific opt-out statement that is contemplated by the MUTA.15 This broadly stated truism is 12 Id. § 3-803(a)(1). 13 Id. § 3-804(a). 14 Id. § 3-805. 15 C.f. Sarofim v. Trust Company of the West, 440 F.3d 213, 220 & n. 10 (5th Cir. 2006) (contractual language required to opt out of the FAA must be ‘clear and unambiguous') (citations omitted); Sweeney v. Savings First Mortgage., LLC, 879 A.2d 1037, 1042 (Md. 2005) (Had it been the intent of the General Assembly to take advantage of the opt out, we believe 11 No. 07-20315 therefore ineffectual to bar the REIT from opting in to the MUTA. The Board properly invoked a staggered board, a two-thirds voting requirement for the removal of trustees, and the MUTA provision requiring action by a majority of shareholders entitled to vote to call a meeting of shareholders. In the absence of a more specific provision or resolution, the MUTA expressly trumps such provisions. Besides, in this instance, we perceive nothing in the MUTA provisions adopted by the Board that adversely affects the rights of the REIT’s shareholders — and, the general condition in the Declaration of Trust is conditioned on creating an adverse effect.