Delaware Supreme Court Provides Guidance on Drafting Advance Notice Bylaws
On July 2, 2015, the Delaware Supreme Courtin Hill International, Inc. v. Opportunity PartnersL.P., affirmed the Court of Chancery’s orderenjoining Hill International, Inc. (Hill) from conductingany business at its 2015 annual meeting,other than convening the meeting for the solepurpose of adjourning it for a minimum timeperiod necessary to allow Opportunity PartnersL.P. (Opportunity), the stockholder-plaintiff, topresent items of business and director nominationsat Hill’s 2015 annual meeting.
The key issue in the case was whetherOpportunity had complied with Hill’s advancenotice bylaw in connection with its proposal topresent its items of business and nominationsbefore the meeting. Unlike many advance noticebylaws where the timeliness of stockholders’notice of intent to make nominations or proposebusiness is based on the anniversary of theprior year’s meeting or the mailing of the prioryear’s proxy statement, Hill’s advance noticebylaw is keyed off the current year’s meetingdate. Interpreting Hill’s advance notice bylaw inaccordance with its plain meaning, the DelawareSupreme Court held that the time period inwhich stockholders were required to providenotice of their intent to make nominations orpropose business had not commenced until Hillhad announced the actual date, as opposed toan approximate date, of its 2015 annual meeting.Although its construction of Hill’s advance noticebylaw resulted in Opportunity retaining the abilityto present its proposals and nominations atthe meeting, the Delaware Supreme Court’s opinionprovides corporations and practitioners clearguidance on drafting advance notice bylaws toensure that they provide the protection they aredesigned to afford.