March 19, 2015

Delaware: Fee-Shifting Bylaw Doesn’t Apply to Former Stockholder

Here’s the intro from this Cooley blog (also see this memo):

In a case just decided, Strougo v. Hollander, C.A. No. 9770-CB (Del. Ch. Mar. 16, 2015), the Delaware Chancery Court addressed the issue of whether the timing of adoption affects the enforceability of a unilaterally adopted fee-shifting bylaw against former stockholders. While it appears that, in light of potential action by the Delaware legislature, the continued viability of fee-shifting bylaws in Delaware is somewhat tenuous, the case may also have application to the enforceability of other bylaw provisions to former stockholders.