Exclusive Forum Provisions: A New Item for Corporate Governance and M&A Checklists

Public companies increasingly are adopting “exclusive forum” bylaws and charter provisions that require their stockholders to go to specified courts if they want to make fiduciary duty or other intra-corporate claims against the company and its directors.

Exclusive forum provisions can help companies respond to such litigation more efficiently. Following most public M&A announcements, for example, stockholders file nearly identical claims in multiple jurisdictions, raising the costs required to respond. Buyers also feel the pain, since they typically bear the costs and may even be named in some of the proceedings. Exclusive forum provisions help address the increased costs, while allowing stockholders to bring claims in the specified forum.

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Topics:  Board of Directors, Bylaws, Corporate Charters, Corporate Governance, Exclusive Forum, Fiduciary Duty, Publicly-Traded Companies, Shareholder Litigation, Shareholders

Published In: Business Organization Updates, General Business Updates, International Trade Updates, Mergers & Acquisitions Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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