Neil Whoriskey, Dean Sattler, and Scott Golenbock are Partners at Milbank LLP. This post is based on a Milbank memorandum by Mr. Whoriskey, Mr. Sattler, Mr. Golenbock, and Iliana Ongun, and is part of the Delaware law series; links to other posts in the series are available here.
The Delaware Supreme Court in Kellner v. Aim Immunotech [1] recently ruled on the enforceability of a “modern” set of advance notice bylaws. Advance notice bylaws are the key tool corporations have to regulate the director nomination process and ensure full and fair disclosure to stockholders in a proxy fight. Critically, advance notice bylaws also allow the board to gather information necessary to guide its recommendation for or against a nominated candidate. While the headline may be that the court found all the challenged bylaws to be unenforceable, looking at each bylaw individually reveals a much less discouraging picture for corporations. [2]