We've touched from time to time in these pages on the issue of forum selection clauses in corporate organic documents. As Frank Aquila and Anna Kripitz explain in a recent article:
Delaware companies are increasingly adopting exclusive forum-selection provisions requiring that shareholder class action and derivative suits be filed in a single court. Most companies adopting these provisions designate the Delaware Court of Chancery, which is known for its expertise and knowledge in corporate law and efficiency in administrating cases on an expedited schedule, as the exclusive venue for shareholder litigation. ...
Most companies adopting exclusive forum clauses do not seek shareholder approval to do so, instead opting for board-adopted bylaw amendments or, if going public, implementation through the governing documents in place at the time of the IPO. To date, only 12 public companies have relied on the uncertain outcome of a shareholder vote for implementation, despite legal challenges and opposition from proxy advisory firms and, recently, shareholder activists, to provisions unilaterally adopted post-IPO.
They go on to analyze ISS' and Glass Lewis' positions on the issue and the prospects for shareholder approval of charter amendments adding forum selection clauses.
(HT: Pileggi)
