Trends in Exclusive Forum Bylaws
The Conference Board Director Notes, January 2014
13 Pages Posted: 21 Mar 2014
Date Written: January 15, 2014
In response to the rising tide of strike suits challenging mergers and acquisitions and the adequacy of executive compensation disclosures, more companies are adopting or considering adopting exclusive forum bylaws. These bylaws, which are largely a Delaware phenomenon, require that derivative actions, stockholder class actions, and other intracorporate disputes be litigated exclusively in designated courts. This article examines the increase in the adoption of such bylaws following a June 2013 Delaware Court of Chancery decision upholding their validity. It also examines the language companies are including in such bylaws, their enforceability in litigation and adoption considerations.
Keywords: exclusive forum, bylaws, Delaware
JEL Classification: K22, K41
Suggested Citation: Suggested Citation