## Facts

- General United Group, Inc. (GUG), an Iowa corporation, had three share classes: preferred, common, and Class B common, with conversion rights into common stock.
- American Life & Casualty Co. (Casualty) owned all GUG preferred and Class B shares and a small portion of GUG common; the public owned the remaining common shares.
- Casualty also owned all stock of All American Delaware Corp. (AADC), the entity designated to survive a merger with GUG.
- The merger plan provided that GUG shares owned by Casualty (across classes) would be canceled without consideration, while public common shares would be converted into a right to receive cash and then cease to exist.
- At the merger vote, all classes voted together as a single group; the plan received more than two-thirds of all outstanding voting shares combined, but not two-thirds of the common shares considered alone.
- Public common shareholders sued, contending Iowa law required common stock to vote as a separate class and to approve the merger by a two-thirds class vote in addition to the two-thirds overall vote.
- A federal district court certified to the Iowa Supreme Court the state-law question on whether separate class voting by common shareholders was required.

## Issues

1. Whether Iowa merger-voting statutes required GUG common shareholders to vote separately as a class on the merger and to approve it by at least a two-thirds class vote, in addition to a two-thirds vote of all outstanding voting shares.

## Decision

- The Iowa Supreme Court answered the certified question in favor of the corporate defendants.
- Iowa law did not require a separate class vote by GUG common shareholders under these merger terms.
- Approval by at least two-thirds of all outstanding shares entitled to vote, voting together, satisfied the statutory merger-approval requirement.

## Legal Principles

- Under Iowa merger statutes, the default rule is approval by “two-thirds of the outstanding shares entitled to vote” voting as a single group, absent an express statutory requirement for separate class voting.
- Separate class voting is required only when a statute expressly mandates it, typically where a transaction alters a class’s preferences, limitations, or relative rights as a class.
- Disparate economic effects on a class, standing alone, do not create a statutory right to separate class voting when formal class rights are not altered in the manner specified by statute.
- Complaints about a controlling shareholder’s merger structure generally sound in fiduciary-duty and fairness doctrines rather than in an implied statutory expansion of class-vote rights.

## Conclusion

The court held that Iowa corporate law did not entitle common shareholders to a separate class vote on the merger; the merger could be approved by a two-thirds vote of all outstanding voting shares counted collectively, with minority-shareholder objections left to fiduciary-duty and fairness claims rather than voting-rights statutes.


Shidler v. All Am. Life & Fin. Corp., 298 N.W.2d 318 (Iowa 1980)