Delaware Rulings Point To Governance Litigation’s Ideal Window

Timing is everything—in life and in Delaware.

Delaware Supreme Court decisions issued this year have invoked timing to dismiss stockholder challenges to governance arrangements, with one case finding the dispute unripe and another finding the dispute untimely.

These rulings clarify when stockholder challenges to governance decisions may appropriately be brought.

Too Early

In April, the Delaware Supreme Court, in In re AES Corporation, affirmed the dismissal of two stockholder challenges to advance notice bylaws as unripe.

Advance notice bylaws are the provisions in a corporation’s bylaws that specify timing and informational requirements for shareholders to nominate directors or vote on other matters. They’ve been a hot topic in Delaware over the last few years. Corporations have made the requirements to nominate directors increasingly complex, and a wave of litigation has ensued.