2023.21 That said, it appears that individual directors lacking the requisite qualifications face a greater risk of being challenged and replaced. Focus on Advance Notice Bylaws Activist investors were encouraged by several Delaware court decisions scrutinizing advance notice bylaws. In one case, the Delaware Supreme Court reiterated that advance notice bylaws must “‘be reasonable in their application’ and not unfairly interfere with stockholder voting” and invalidated an “unintelligible” bylaw comprised of one sentence that ran on for more than 1,000 words.22 While advance notice bylaws remain a critical piece of every public company’s preparedness, activists are now looking for advance notice bylaws that are overly broad or have unique features not viewed as “market.” In the first half of 2024, stockholders submitted 11 proposals under Rule 14a-8 challenging the applicable company’s advance notice bylaws, though those proposals eventually were withdrawn, except for one that was not passed. 21 Barclays 2024 Review of Shareholder Activism; Barclays 2023 Review of Shareholder Activism. 22 Kellner v. AIM ImmunoTech Inc. (Del. Supreme July 11, 2024). Retail investors and social media have played increasing roles in activism over the last several years, joining “occasional” activists … in an increasingly diverse activism landscape. Client Alert Occasional Activists: Shaping Corporate Governance in 2024 Client Alert Maintaining the Balance of Power in Venture-Backed Startups: The Impact of Delaware’s Moelis Decision on Drafting Shareholder Rights Provisions 2024 M&A Annual Review 11
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