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

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.

Draft of the Rules, Directions, and Statutes of the Boylston Professorship of Rhetoric and Oratory in Harvard College, [ca. 1804]

This original draft was probably written by Eliphalet Pearson (1752-1826) as a member of the committee charged with the task of establishing the rules, directions, and statutes for the Boylston Professorship by the Harvard Corporation and the Board of Overseers. This draft is heavily edited and contains many cross outs through the text.