Delaware Court’s Narrow Reading of CNET Bylaws Clears the Way for JANA Proxy Contest
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By ruling that an advance notice provision in CNET’s bylaws applies only to stockholder proposals under Rule 14a-8 and not to a stockholder-financed proxy contest, the Delaware Chancery Court declined to address the more provocative issue posed by the CNET bylaws: whether a company may validly impose a one-year stock holding requirement on the rights of stockholders to conduct a proxy contest. Chancellor Chandler’s narrow construction of the CNET bylaw provision neatly sidesteps this issue, while underscoring the need for explicit drafting and clear language in bylaws that may be seen as restricting the stockholder franchise.