My colleague Laura A.McIntosh and I have written an article recently published in the New York Law Journal on May 22, 2008 entitled Corporate Governance Update: Advance Notice Bylaws: Lessons from Recent Cases. Until recently, advance notice bylaws have been unremarkable and fairly uncomplicated provisions, generally easily complied with and largely uncontroversial. In two recent cases, Jana Master Fund, Ltd. v. CNet Networks, Inc. and Levitt Corp. v. Office Depot, Inc., the Delaware courts allowed activist stockholders to exploit potential drafting ambiguities to circumvent the well-intended rationale of the advance notice bylaw. As a result, advance notice bylaws have emerged as an important battleground in the conflict between companies and activist stockholders. Our article describes the purpose, operation and functions of an advance notice bylaw and considers the CNet and Office Depot decisions. Against the backdrop of these cases and in light of the increasingly complicated mechanisms through which investors hold stock, the article also discusses important points that companies should consider when reviewing their advance notice bylaws and bringing them up to date.
The article is available here.
