Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
By Michael Greene
Dec. 5 — The National Conference of Public Employees Retirement Systems (NCPERS) and eight labor unions have become the latest to express concerns about a Delaware Supreme Court decision that allows non-stock corporations to unilaterally adopt fee-shifting bylaws.
In a Dec. 3 letter to Delaware Gov. Jack Markell (D), NCPERS and its labor coalition partners asked “that swift action be taken to restore confidence in Delaware’s corporate law, preserve investors’ rights to enforce the nation’s securities laws, and make clear that corporations and their directors and officers cannot immunize themselves from accountability.”
This request comes just a week after the Council of Institutional Investors sent a letter asking the Delaware State Bar to formulate and recommend a proposal to the Delaware General Assembly that would either overturn or narrow the ATP Tour Inc. v. Deutscher Tennis Bund decision.
Responding to a certified question in May in ATP Tour, the Delaware Supreme Court found that fee-shifting provisions in the bylaws of a Delaware non-stock corporation can be enforceable.
According to the NCPERS letter, the sweeping implications of the decision “eviscerates investors' rights and threatens the security of US capital markets,” claiming that interpretations of these bylaws as “contracts” between shareholders and companies effectively eliminates private enforcement of corporate governance and securities laws.
Agreeing with a common criticism, the groups noted that many require investors to be entirely successful on almost every claim to avoid personal liability for litigation expenses. They said that at least 34 corporations have adopted similar bylaws or even more extreme versions than those endorsed by the Delaware Supreme Court.
NCPERS is the largest trade association for public sector pension funds throughout the U.S. and Canada. The eight unions represent more than 16 million public and private sector workers.
Fee-shifting bylaws have been a hot topic since the ATP Tour decision. Both plaintiffs' firms and academics have raised concerns regarding their impact.
To contact the reporter on this story: Michael Greene in Washington at email@example.com
To contact the editor responsible for this story: Ryan Tuck at firstname.lastname@example.org
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)