Proposed Amendment to Delaware General Corporation Law would Preclude Fee-Shifting in Charters and Bylaws of Stock Corporations
On May 22, 2014, the Corporation Law Section of the Delaware State Bar Association (the “DSBA”) was provided with a proposed amendment to the Delaware General Corporation Law (the “DGCL”). The proposed amendment, if enacted into law, would eliminate the ability of Delaware stock corporations to adopt provisions imposing liability on stockholders, including bylaws or charter provisions that would impose fee-shifting liability. Following adoption of this proposal, the holding of ATP Tour, Inc. v. Deutscher Tennis Bund, which upheld the facial validity of a fee-shifting bylaw, would apply only to nonstock corporations. See Morris Nichols Update, Supreme Court Upholds Facial Validity of Fee-Shifting Bylaw Adopted by Nonstock Corporation (May 9, 2014).
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