Delaware Chancery Upholds Rejection of Advance Notice; Strikes Down Certain Bylaw Amendments
January 05, 2024
In Kellner v. AIM Immunotech Inc., et al., Vice Chancellor Will of the Delaware Court of Chancery upheld the company’s rejection of an advance notice of nomination finding that the Board acted reasonably and equitably in rejecting the notice and that it did not breach its fiduciary duties in enforcing valid advance notice bylaws. At the same time, in applying an enhanced scrutiny standard of review, the court found that four provisions of the bylaws were invalid as they were disproportionate responses to any threatened corporate objectives. The case shows that Delaware courts will uphold a company’s rejection of an advance notice of nomination that does not comply with valid bylaw provisions, while at the same time showing that a court may blue-pencil a company’s bylaws by finding certain provisions invalid, thus offering lessons for drafting advance notice bylaws.