Under Delaware law, no advance notice of a stockholder's intent to nominate directors at an annual meeting need be given, unless the corporation has duly imposed such a requirement.
Plaintiff stockholder sued defendant corporation for a declaration that the stockholder could nominate two candidates for election to the board of directors of the corporation at the corporation's annual stockholders meeting. Both parties filed a motion for judgment on the pleadings in accordance with Del. Ch. Ct. R. 12(c). The corporation's notice of the annual meeting of shareholders provided that one of the items of business was for the election of members of the corporation's board of directors. The stockholder filed its own preliminary proxy statement soliciting proxies in support of its two nominees for directors. The stockholder did not, however, attempt to give advance notice of its intention to propose these nominees. The corporation's board relied upon the advance notice provision of the corporation's bylaws to justify the rejection of the stockholder's nominations.
Does the business of electing directors include the nomination of directors?
The court, after interpreting the corporation's bylaws and Del. Code Ann. tit. 8, § 211(b), found that the nomination of directors was unambiguously within the purview of the term "business" in the notice provision of the corporation's bylaws and thus the stockholder's director nominations implicated the advance notice provision of the bylaws. Moreover, because the corporation properly brought the business of electing and nominating the directors before the annual meeting through its notice, the corporation's board of directors could not prevent the stockholder from nominating candidates for election to the board at that meeting.