Staying in the Delaware Corporate Governance Lane: Fee Shifting Bylaws and a Legislative Reaffirmation of the Rules of the Road
Liability on a stockholder, Attorneys’ fees, internal corporate claims
The Delaware legislature has taken steps towards the adoption of amendments to the Delaware General Corporation Law (DGCL) that would prohibit fee shifting provisions in the articles and bylaws. The language in the legislative proposal, however, addresses fee shifting provisions only in the context of "internal corporate claims." Some have raised concerns that this language would allow for fee shifting provisions that applied to other types of actions, including at least some cases brought under the securities laws.
This piece suggests that in fact the Delaware General Corporation Law already prohibits the adoption of bylaws and certificate provisions that apply to causes of action unrelated to internal corporate claims. As a result, there was no reason for the Delaware legislature to expressly bar fee shifting provisions in these types of actions.
54 Bank and Corporate Governance Law Reporter 4 (2015)
Copyright held by the author. User is responsible for all copyright compliance.
Copyright Statement / License for Reuse
This work is licensed under a Creative Commons Attribution 4.0 International License.