April 15, 2009
Delaware's Proxy Access
Posted by Lisa Fairfax

On Friday, Delaware's governor signed legislation enacting several changes to the Delaware General Corporation Law.  Among those changes is a new Section 112 entitled "access to proxy solicitation materials."  Section 112 authorizes (but does not require) corporations to adopt bylaws that require the corporation to include shareholder-nominated candidates for director on the corporation's proxy statement, subject to procedures and conditions that may be set forth in the bylaws.  Section 112 then includes a list of non-exhaustive potential procedures and conditions including a provision requiring a minimum level of ownership, and one conditioning eligibility upon the number or proportion of directors nominated by stockholders.  This latter condition appears to enable corporations to prevent shareholders' access to the proxy statement when it could result in a control contest.  The new Section 112 will be effective on August 1, 2009.

This is certainly an interesting development for Delaware corporate law and shareholder activists.  Although the bylaw provision is voluntary, it may give shareholder activists greater leverage in demanding proxy access, while giving corporations the ability to shape the conditions under which such access will be granted.  Importantly for Delaware, given the new SEC chair's seeming support of proxy access, this new law may ensure that it continues to have some voice in the proxy access debate.

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