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Certain Advance Notice Bylaw Provisions Invalidated as “Unreasonable”

By Randi Morrison posted 01-16-2024 05:22 PM

  

As discussed in these memos from Paul Hastings and  Richards Layton & Finger, in a recent case decided December 28, the Delaware Court of Chancery declared invalid certain advance notice bylaw provisions (summarized in the memos) based on a determination that they were overbroad, ambiguous, and/or unreasonable, and otherwise disproportionate to the threat faced by the company and associated corporate objectives. Other bylaw provisions were upheld as a reasonable response to the threat. The court’s analysis is instructive for other companies considering the adoption or amendment of advance notice bylaws in preparation for—or in response to—anticipated activist activity.  

Access additional resources on our Bylaws, Shareholder Activism, and Universal Proxy pages.

            This post first appeared in the weekly Society Alert!

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