Revisiting Your Corporate Bylaws — Now's the Time to Address the Changing Landscape

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A number of important regulatory, legislative and market developments over the last two years have made this an ideal time to revisit your corporate bylaws in order to determine whether changes should be made to reflect current law and best practices. These developments include changes that could have a significant impact on stockholder meetings and voting, such as regulatory changes related to discretionary voting by brokers and laws related to establishing record dates for notice of and voting at stockholder meetings. In addition, as a result of recent developments in Delaware law, corporations may want to consider adopting bylaws establishing Delaware as the exclusive forum for litigation. The following suggestions address some of the actions Delaware corporations should consider:

TREATMENT OF BROKER NON-VOTES AND ABSTENTIONS On July 1, 2009, the Securities and Exchange Commission (the “SEC”) approved an amendment to New York Stock Exchange Rule 452 that eliminated discretionary voting by brokers in uncontested director elections, effective January 1, 2010. Under revised Rule 452, brokers are no longer permitted to vote on behalf of a stockholder in any uncontested election for directors unless the broker receives voting instructions from the stockholder. In addition, under Section 957 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), brokers are not only prohibited from voting for the election of directors without customer instruction, but they are also prohibited from voting without instruction on executive compensation matters, including advisory votes or any other significant matter (as determined by the SEC).

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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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