Delaware bans bylaws imposing legal fees on plaintiffs in losing shareholder litigation
A law banning corporate bylaws that impose a hefty price on investors who file unsuccessful shareholder derivative suits has been signed by Delaware’s governor. It prohibits companies from requiring plaintiffs in such cases to pay the company’s attorney fees.
However, in a nod to disappointed companies, the new law does allow companies to enact bylaws requiring investors who sue to pursue the case in the Delaware courts, reports Reuters.
Many companies choose to incorporate in Delaware due to the state’s reputation for company-friendly laws and top-notch courts.
ABAJournal.com: “Amid battle over bill banning fee-shifting bylaws in Delaware, legal experts point to loophole”