Fee-Shifting May Disrupt Delaware's Dominance

Law360, New York (March 13, 2015, 12:17 PM EDT) -- New legislation proposed by the Delaware Corporate Law Council has highlighted tensions between Delaware corporate lawyers and the companies that choose Delaware as their state of incorporation. The proposed legislation would, among other things, forbid companies from adopting articles or bylaws that include "any provision that would impose liability on a stockholder for the attorneys' fees or expenses of the corporation or any other party in connection with an intracorporate claim ...."[1] The council argues that such fee-shifting "effectively eliminates stockholder rights, because stockholder litigation is the only method of enforcing them."[2] The president of the U.S. Chamber of Commerce's Institute for Legal Reform, on the other hand, characterizes the proposal as "a huge win for Delaware's lawsuit business at the expense of shareholders in Delaware companies."[3]...

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