Delaware Supreme Court Invalidates Bylaw Provision That Would Have Shortened Terms of Staggered Board

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Late last month, the Delaware Supreme Court reversed an October 2010 Delaware Court of Chancery ruling and held that an ambiguous staggered board charter provision was intended to provide that each class of directors serve three-year terms, thus thwarting a hostile bidder’s attempt to hold an annual meeting – and potentially replace a majority of the board – less than four months after directors were last elected. The Delaware Supreme Court’s ruling suggests that the court will give ambiguous annual meeting charter provisions a practical review, which should come as welcome news to the many Delaware corporations that may have similar staggered board provisions in their charters.

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