Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.
Vestin Realty Mortgage I, Inc. (the "Company") announced today that it has terminated its election to be treated as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the “Code”), effective for the tax year ending December 31, 2012. Under the Code, the Company will not be able to make a new election to be taxed as a REIT during the four years following December 31, 2012. Pursuant to the Company's charter, upon the determination by the Board of Directors of the Company that the Company should no longer qualify as a REIT, the restrictions on transfer and ownership of shares set forth in Article VII of the Company’s charter ceased to be in effect and, accordingly, shares of the Company’s stock will no longer be subject to such restrictions.
Item 3.03 Material Modification to Rights of Security Holders.
The Company further announced today that the Company has amended its stockholders’ rights plan to provide that a stockholder, other than Michael Shustek, may own up to 20% of the Company's outstanding shares of common stock, and that Michael Shustek may own up to 35% of the Company's outstanding shares of common stock.
Why does Shustek get preference? Does anyone know of any other shareholder rights plans like this?
Of course Shustek gets what he wants. His decision to make the Fund into a REIT caused several hundreds if not thousands of people to loose their hard earned money. I wonder if Shustek is still a millionaire and buying race horses. Of course he gets what he wants.
Yes it for sure signals that he will be buying more. He hit the cap last year and clearly wants the rest. This may be first step before he removes the cap completely (for himself).
The downside is if he decides to strangle the company with management fees.
I believe that management fees will go down now though that it isn't a REIT anymore. The only excuse for charging such a high fee was that when the REIT was established the fee was determined based on invested capital.
I don't understand why they haven't merged yet. And why they made these changes before completing the merger.