Public companies would be well advised, on a lovely, clear day (in the Delaware sense), to update their advance notice bylaws. In the normal course these bylaws receive little attention, but in the event of an activist campaign they are critical to the board’s ability to discharge its fiduciary duties.  The board will have a positive duty to inform itself, among other things, of the activist’s plans and proposals, the degree of the activist’s financial alignment with long-only stockholders, and the qualifications and independence of the activist’s nominees.  This information will inform any settlement discussions, support a recommendation for or against the activist’s nominee and allow the board to ensure that stockholders receive accurate and timely disclosure regarding the nomination.
Continue Reading Alignment Advance Notice Bylaw

Activist Settlements and A Proposed Amendment to the DGCL 

Perhaps the most fundamental expectation of public company investors is the expectation of investing in a company run by a board of directors – a board elected by stockholders and charged with managing the corporation on behalf of all stockholders. Delaware seems primed to upset that expectation.
Continue Reading Contracting Out of Corporate Law: Should Public Company Boards Be Allowed to Delegate Governance to a Single Stockholder?

The Delaware General Assembly recently adopted amendments to the Delaware General Corporation Law (the “DGCL”), effective as of August 1, 2022.  Among other changes, the amended DGCL provides for exculpation of officers from liability for breaches of the duty of care and also expands the ability of boards to delegate authority to members of management in connection with the issuance of shares of common stock and options.  The change with the most potential for far-reaching impact is with respect to officer exculpation.  For existing corporations, a charter amendment is required to take advantage of the new officer exculpation, and it is an open question as to whether shareholders (and proxy advisory firms) will support extending exculpation to officers.
Continue Reading 2022 Amendments to the Delaware General Corporation Law