Richards Layton & Finger
 

Delaware Supreme Court Provides Guidance on Drafting Advance Notice Bylaws

July 2015

On July 2, 2015, the Delaware Supreme Court in Hill International, Inc. v. Opportunity Partners L.P., affirmed the Court of Chancery’s order enjoining Hill International, Inc. (Hill) from conducting any business at its 2015 annual meeting, other than convening the meeting for the sole purpose of adjourning it for a minimum time period necessary to allow Opportunity Partners L.P. (Opportunity), the stockholder-plaintiff, to present items of business and director nominations at Hill’s 2015 annual meeting.

The key issue in the case was whether Opportunity had complied with Hill’s advance notice bylaw in connection with its proposal to present its items of business and nominations before the meeting. Unlike many advance notice bylaws where the timeliness of stockholders’ notice of intent to make nominations or propose business is based on the anniversary of the prior year’s meeting or the mailing of the prior year’s proxy statement, Hill’s advance notice bylaw is keyed off the current year’s meeting date. Interpreting Hill’s advance notice bylaw in accordance with its plain meaning, the Delaware Supreme Court held that the time period in which stockholders were required to provide notice of their intent to make nominations or propose business had not commenced until Hill had announced the actual date, as opposed to an approximate date, of its 2015 annual meeting. Although its construction of Hill’s advance notice bylaw resulted in Opportunity retaining the ability to present its proposals and nominations at the meeting, the Delaware Supreme Court’s opinion provides corporations and practitioners clear guidance on drafting advance notice bylaws to ensure that they provide the protection they are designed to afford.