Staying in the Delaware Corporate Governance Lane: Fee Shifting Bylaws and a Legislative Reaffirmation of the Rules of the Road

54 Bank and Corporate Governance Law Reporter 4 (2015)

U Denver Legal Studies Research Paper No. 15-23

5 Pages Posted: 30 May 2015

See all articles by J. Robert Brown

J. Robert Brown

University of Denver Sturm College of Law

Date Written: May 28, 2015

Abstract

The Delaware legislature has taken steps towards the adoption of amendments to the Delaware General Corporation Law (DGCL) that would prohibit fee shifting provisions in the articles and bylaws. The language in the legislative proposal, however, addresses fee shifting provisions only in the context of "internal corporate claims." Some have raised concerns that this language would allow for fee shifting provisions that applied to other types of actions, including at least some cases brought under the securities laws.

This piece suggests that in fact the Delaware General Corporation Law already prohibits the adoption of bylaws and certificate provisions that apply to causes of action unrelated to internal corporate claims. As a result, there was no reason for the Delaware legislature to expressly bar fee shifting provisions in these types of actions.

Suggested Citation

Brown, J. Robert, Staying in the Delaware Corporate Governance Lane: Fee Shifting Bylaws and a Legislative Reaffirmation of the Rules of the Road (May 28, 2015). 54 Bank and Corporate Governance Law Reporter 4 (2015); U Denver Legal Studies Research Paper No. 15-23. Available at SSRN: https://ssrn.com/abstract=2611746

J. Robert Brown (Contact Author)

University of Denver Sturm College of Law ( email )

2255 E. Evans Avenue
Denver, CO 80208
United States

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