Board Negligence
What Is a Board of Directors?
A publicly traded corporation is owned by the shareholders. In the case of IVDN, as of October 31, 2023, there were a little over 35 million shares of IVDN stock (held by about 239 investors), so each share of stock represents ownership of one thirty-five-millionth of the company.
A corporation is managed and operated by the officers: The CEO and other "C-Suite" executives.
But how do the owners of the company (the shareholders) ensure that management is working in their best interests?
That's the role of the Board of Directors. The boardmembers are elected by the shareholders and, at least in theory, exercise oversight of the company's management on behalf of the shareholders. You may have heard the term "Board Meeting" before; this is simply a meeting between the Board of Directors and the company's officers so that the boardmembers can remain informed of the company's operations, provide guidance and suggestions to the executives, and ensure the company is being operated consistently with shareholders' interests.
Delaware law (which governs IVDN's operations because IVDN is incorporated in Delaware), like the laws of most states, requires that corporations have annual shareholder meetings at which shareholders elect the board members to represent them.
To the best of our ability to ascertain, IVDN has never held a shareholder meeting. (Have you ever received a notice of shareholder meeting in the mail from IVDN? You should have received one each year that you've been a shareholder.) This calls into question: who are the members of the Board of Directors? How did they get on the board? And how can we as shareholders be confident that they are representing our interests?
These are some of the questions that ivdn-lawsuit.com wants to force answers to.
A corporation is managed and operated by the officers: The CEO and other "C-Suite" executives.
But how do the owners of the company (the shareholders) ensure that management is working in their best interests?
That's the role of the Board of Directors. The boardmembers are elected by the shareholders and, at least in theory, exercise oversight of the company's management on behalf of the shareholders. You may have heard the term "Board Meeting" before; this is simply a meeting between the Board of Directors and the company's officers so that the boardmembers can remain informed of the company's operations, provide guidance and suggestions to the executives, and ensure the company is being operated consistently with shareholders' interests.
Delaware law (which governs IVDN's operations because IVDN is incorporated in Delaware), like the laws of most states, requires that corporations have annual shareholder meetings at which shareholders elect the board members to represent them.
To the best of our ability to ascertain, IVDN has never held a shareholder meeting. (Have you ever received a notice of shareholder meeting in the mail from IVDN? You should have received one each year that you've been a shareholder.) This calls into question: who are the members of the Board of Directors? How did they get on the board? And how can we as shareholders be confident that they are representing our interests?
These are some of the questions that ivdn-lawsuit.com wants to force answers to.
What Has the Board Done?
When a company is losing money year after year after year, it stands to reason that the Board would convene one or more meetings with management to find out what's up and to tell management that the shareholders are unhappy, and work with management to find fixes to the company's problems.
Yet that doesn't seem to be the case. From the filings that IVDN is required to file with the SEC, the following quotes appear:
From the 2023 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2022 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2021 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2020 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2019 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2018 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2017 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2016 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2015 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2014 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
That's right: the board appears to have had no meetings in the past decade. Yet in each of these years, IVDN has lost money.
Does this sound like the actions of a board that is exercising oversight of management on behalf of shareholders?
Those of us at ivdn-lawsuit.com would like to know how the board of directors has been representing our interests to corporate management.
Yet that doesn't seem to be the case. From the filings that IVDN is required to file with the SEC, the following quotes appear:
From the 2023 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2022 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2021 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2020 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2019 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2018 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2017 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2016 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2015 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
From the 2014 10-K: "During the last full fiscal year, there were no meetings of the Board of Directors."
That's right: the board appears to have had no meetings in the past decade. Yet in each of these years, IVDN has lost money.
Does this sound like the actions of a board that is exercising oversight of management on behalf of shareholders?
Those of us at ivdn-lawsuit.com would like to know how the board of directors has been representing our interests to corporate management.
What Does That Mean?
In general, a member of a company's Board of Directors cannot be held personally liable for the actions of the company. (Such as losing shareholders' investments.)
However, this immunity is not absolute. We are not lawyers, but a ruling from the Delaware Court of Chancery determined that the "intentional dereliction of duty" is an appropriate standard (though not the only standard) for determining whether a fiduciary has acted in good faith.
Furthermore, basic fiduciary rules include:
-- the basic fiduciary duties (care and loyalty, including good faith, oversight and disclosure),
-- key director attributes (independence and disinterestedness, and appreciation of “red flags”),
-- the importance of process (including asking the right questions and keeping a good record),
-- the core standard for judging director conduct (the business judgment rule), and
-- key Delaware law protections (including good faith reliance on others and exculpatory charter provisions).
Again, we are not lawyers. But as reasonably intelligent individuals, we believe that not having a meeting of the board in over a decade while shareholder value declines each year violates at least one of the above fiduciary tenets.
However, this immunity is not absolute. We are not lawyers, but a ruling from the Delaware Court of Chancery determined that the "intentional dereliction of duty" is an appropriate standard (though not the only standard) for determining whether a fiduciary has acted in good faith.
Furthermore, basic fiduciary rules include:
-- the basic fiduciary duties (care and loyalty, including good faith, oversight and disclosure),
-- key director attributes (independence and disinterestedness, and appreciation of “red flags”),
-- the importance of process (including asking the right questions and keeping a good record),
-- the core standard for judging director conduct (the business judgment rule), and
-- key Delaware law protections (including good faith reliance on others and exculpatory charter provisions).
Again, we are not lawyers. But as reasonably intelligent individuals, we believe that not having a meeting of the board in over a decade while shareholder value declines each year violates at least one of the above fiduciary tenets.
