Leonard Wood, Kai H. E. Liekefett, and Derek Zaba are Partners at Sidley Austin LLP.
There has never been a more important time for public companies traded on U.S. stock exchanges to have appropriate, robust advance notice bylaws. These provisions protect the interests of all shareholders by ensuring a fair process in relation to the conduct of corporate director elections and shareholder nominations of director candidates. Companies and shareholders benefit from robust advance notice bylaws because shareholder activists annually knock on the doors of a staggering number of U.S. public companies each year bearing dissident director nominations and other business proposals, with unpredictable and, in some cases, harmful consequences. Since January 2022, activists initiated over 900 public campaigns at corporations traded in the U.S., based only on publicly available data.[1] At the same time, over the past two years, a spate of high-profile lawsuits in Delaware challenging the validity of advance notice bylaws created uncertainty, for Delaware corporations as well as corporations of other states, about the legality and advisability of adopting new advance notice bylaws or modifying those that companies already had in place.
