Trends in Exclusive Forum Bylaws
Claudia H. Allen
In response to the rising tide of strike suits challenging mergers and acquisitions and the adequacy of executive compensation disclosures, more companies are adopting or considering adopting exclusive forum bylaws. Such bylaws require that derivative actions, stockholder class actions, and other intracorporate disputes be litigated exclusively in designated courts. This report examines the increase in the adoption of such bylaws following a June 2013 Delaware Court of Chancery decision upholding their validity. It also examines the language companies are including in such bylaws, their enforceability in litigation, and issues for boards to consider before adopting them.