In response to pending litigation in the Delaware Court of Chancery, Morgan Lewis suggested public companies conduct a documented review of their advance notice bylaw provisions for particular director resignation requirements that are being challenged as a facial violation of Delaware law so that they are prepared to mitigate the potential for successful stockholder demands seeking corrective action if the litigation is successful. According to the firm, the pending legal challenges appear to be motivated by the opportunity for stockholder counsel fees, which the Delaware Court of Chancery (and other jurisdictions) can award at the company’s expense upon a finding that the stockholder has conferred a benefit on the company such as by effecting a correction of unlawful bylaw provisions.
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