2015 Proxy Season Preview: Chancery Court Declines to Order Waiver of Advance Notice Bylaws
By William Axtman and Caitlin Howe
Can an activist shareholder avoid compliance with advance notice bylaw provisions to run a dissident slate of directors at a fast-approaching annual meeting? The answer, which is discussed in our summary of AB Value Partners, often hinges on the actions of the board.
In AB Value Partners, LP v. Kreisler Manufacturing Corp., Vice Chancellor Parsons denied AB Value’s request for a temporary restraining order to enjoin enforcement of Kreisler’s advance notice bylaw provisions. AB Value, a hedge fund that owned approximately 11% of Kreisler’s shares, sought to run a competing slate of director’s at Kreisler’s annual meeting. The bylaws of Kreisler required that stockholders provide advance notice within a 60-90 day window prior to the anniversary date of the preceding annual meeting of any business that the stockholders wanted to address at Kreisler’s annual meeting. AB Value failed to propose its slate of directors within this required timeframe.