Activist Proxy Slates and Advance Notice Bylaws

In a recent bench ruling, the Delaware Court of Chancery enforced an advance notice bylaw and thereby precluded an activist investor from nominating a slate of directors and conducting a proxy contest at a company’s annual meeting.  The court enforced the plain terms of the advance notice bylaw, which required that notice of the nominations had to be given by a stockholder of record. The court found that the activist owned shares only in “street name” on the deadline for giving notice of its nominations, was aware of the bylaw’s requirements, and failed to meet such requirements, and that the corporation was not at fault for the activist’s mistake. The court also refused to give effect to a second notice submitted by the activist promptly after the deadline that had cured its share ownership deficiency.

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