Guidance on Drafting Proxies Under Delaware Law
June 14, 2023
Publication| Corporate Transactions| Corporate Governance| Mergers & Acquisitions
As the Delaware Supreme Court recently reaffirmed in Daniel v. Hawkins, 289 A.3d 631 (Del. 2023), proxies are generally construed narrowly under Delaware law. In light of these principles of strict construction, proxies in voting and support agreements, secured debt instruments, and other corporate documents should be drafted in a manner that fully reflects the intended scope of the parties’ proxy relationship. A recent opinion from the U.S. Bankruptcy Court for the District of Delaware, In re CII Parent, 2023 WL 2926571 (Bankr. D. Del. Apr. 12, 2023), provides helpful guidance on drafting proxies and highlights potential pitfalls for the unwary, including in relation to the proxyholder’s power to execute and deliver stockholder consents.