Sullivan & Cromwell discusses Delaware Legislation Saying No to “Loser-Pays” Fee-Shifting Bylaws But Yes to Forum-Selection Bylaws for Stock Corporations

On May 12 and June 11, 2015, the Delaware Senate and House of Representatives, respectively, passed a bill (the “Bill”)[1] that would amend Title 8 of the Delaware General Corporation Law (“DGCL”) to prohibit Delaware stock corporations from including in their charters or bylaws so-called “loser-pays” fee-shifting provisions in connection with “internal corporate claims” brought by stockholders. Following the Delaware Supreme Court’s May 2014 decision in ATP Tour, Inc. v. Deutscher Tennis Bund, in which the Court held that “fee-shifting provisions in a non-stock corporation’s bylaws can be valid and enforceable,”[2] it was unclear to some practitioners … Read more

Sullivan & Cromwell Discusses How Companies Should Prepare for Potential Proxy Disclosure Litigation

Plaintiffs’ attorneys have continued to bring, or threaten, litigation against U.S. companies following the filing of their annual proxy statements. These complaints generally allege disclosure deficiencies in connection with the approval of equity compensation plans and/or the advisory shareholder “say-on-pay” vote and, as with merger-related “strike suits,” seek to enjoin the annual meeting. Early cases gained some traction, resulting in settlements yielding additional proxy disclosures and legal fees for the  plaintiffs, though most companies have resisted settling. While some companies have taken the  heightened litigation risk into account in crafting 2013 proxy disclosure, it seems likely that no level of  … Read more

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Editor's Tweet: Sullivan & Cromwell Discusses How Companies Should Prepare for Potential Proxy Disclosure Litigation