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Exclusive Forum Selection Bylaws: Enforceability and Effectiveness

09.24.2014

On September 8, 2014, the Delaware Chancery Court upheld a newly adopted bylaw of a Delaware corporation that designated an exclusive forum outside Delaware for litigating intra-company disputes (See City of Providence v. First Citizens Bancshares, Inc., et al., C.A. No. 9795-CB (Del. Ch. 2014)).  This case is the most recent holding in a line of decisions that validate corporate actions to minimize the costs and uncertainty of multi-state litigation by establishing an exclusive forum to litigate increasingly common lawsuits arising out of M&A transactions, while still preserving stockholder rights.  The full alert is available here.

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