NaturalShrimp Inc (SHMP)

[MFranny]

If the only explanation for WHY Easterling would convert his preferred shares to common = to make money for himself (self-dealing), then you're right, the logical outcropping of such statements "are mighty strong words to throw at the CEO". Perhaps those saying such things should stop...

Generally, management owes a PRIMARY duty to common shareholders; to maximize their value. If Management does something that harms common shareholder value, then it must have a valid business judgment factual defense to justify its harmful actions. For instance, making the case that its important to invest in R&D rather than pay a dividend, etc.

Here, if someone argues that Easterling will convert his preferred shares to common, thereby diluting common shareholder value, ONLY for his own monetary benefit (not defensible by BJR), then he is liable to common shareholders for a breach of his duty. This is basic securities law. Moreover, an insider may "self-deal" (i.e. make money off corporate shares, but so long as it is not considered insider trading). Without a valid Rule 10b5-1 plan in place, most insider trades are presumptive insider trading.

For the sake of argument, if a conversion is not considered a "sale", then it's possible that a Rule 10b5-1 may not be required. Nevertheless, as a manager, Easterling must act in the best interest of the corporation, even when converting or selling his own shares in the corporation. I would argue that a 14C, if it (as it should) addresses Preferred shares, then shareholders will be given notice of how management intends to handle those shares.

Just another scare tactic issue.