The Latest on Fee Shifting Bylaws

Fee shifting bylaws arise out of an interpretation of DGCL 109 that essentially removes all limits on the board of directors.  As long as the bylaw relates to the "business of the corporation," it is facially permitted under Delaware law. 

The Delaware Supreme Court has read out of the provision any limit imposed by the internal affairs doctrine.  For a discussion of these bylaws, see Shifting Back the Focus: Fee Shifting Bylaws and a Need to Return to Legislative Intent.  For a discussion of this piece by Bloomberg BNA, see Professor Lambasts Delaware’s ‘ATP Tour,’ Arguing That it Overturns Core Corporate Law.