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by John Stigi
In Hill International, Inc. v. Opportunity Partners L.P., No. 305, 2015, 2015 Del. LEXIS 322 (Del. July 2, 2015), the Delaware Supreme Court affirmed the Court of Chancery’s grant of injunctive relief as it recognized the plaintiff stockholder’s — as opposed to defendant corporation’s — interpretation of a bylaw as its plain meaning interpretation [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance]. In so holding, both courts reinforced the importance of clear and precisely drafted corporate charter and bylaw provisions, as well as specifically drafted notices of annual meetings of stockholders.
The stockholder plaintiff in the case, Opportunity Partners L.P. (“Opportunity”), sued the corporate defendant, Hill International, Inc. (“Hill”), and members of its board of directors following Hill’s rejection of Opportunity’s notice that it intended to bring certain business and nominations before stockholders at Hill’s 2015 annual meeting. Opportunity sought injunctive relief to enjoin Hill from precluding the presentation of these matters.
Specifically, Opportunity had notified Hill of its intent to submit shareholder proposals for consideration and nominees for election to the Board. Any such requisite notice, per Hill’s advance notice bylaw, generally had to be provided 60 to 90 days before the annual meeting. In the event that “public disclosure of the date of the annual meeting” was given less than 70 days before the meeting itself, however, stockholder notice was due within 10 days of the disclosure. Opportunity’s notice was received on May 7, 2015, and the annual meeting was at the time scheduled to take place on June 9, 2015. Given its centrality to establishing the specific window in which Opportunity had to deliver its notice in order for it to have been timely, the parties’ dispute revolved around one date: the date on which Hill publicly disclosed the 2015 annual meeting.
According to Hill, prior public disclosure occurred as early as April 30, 2014. Hill’s 2014 Definitive Proxy Statement filed with the Securities & Exchange Commission provided that it anticipated holding its 2015 meeting “on or about June 10, 2015.” Under this scenario, Opportunity’s notice would have been untimely because it was not received within the 60 to 90-day window. Opportunity argued that prior public disclosure occurred as late as April 30, 2015, when Hill first announced that the meeting was to take place on June 9, 2014. Opportunity’s notice was therefore timely because it was received well within the 10-day window established by the exception in the advance notice bylaw.
The Court of Chancery held that Hill’s advance notice bylaw based the requisite period for stockholder submissions on the actual date of the meeting, not a possible future date. Additionally finding irreparable harm in denying stockholders the right to vote their shares, the Court enjoined Hill from (a) conducting any business at the then-upcoming meeting other than adjourning it for a minimum period of time and (b) precluding presentation of Opportunity’s items of business and nominations at the meeting.
The Delaware Supreme Court affirmed the grant of injunctive relief. The Supreme Court held:
The plain meaning of “the date” means a specific day — not a range of possible days. The 2014 Proxy Statement’s reference to “on or about June 10, 2015” does not refer to “the date” of Hill’s 2015 Annual Meeting. Rather, “on or about” refers to an approximate, anticipated, or targeted time frame that is intended to encompass more than one “date” — i.e., June 10 — apparently in order to give Hill some flexibility in scheduling. Thus, the 2014 Proxy Statement did not provide “prior public disclosure of the date” of Hill’s 2015 Annual Meeting.
Notably, the Court comments that while the bylaws before it were unambiguous, unclear provisions are resolved in favor of the electoral rights of stockholders.
The Courts’ rulings in this case confirm that a “save the date”-type general notice of when a Delaware corporation plans on scheduling its annual meeting of stockholders will not suffice to trigger advance notice deadlines.
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