Court of Chancery Upholds Forum Selection Clause in Corporate Bylaws

Francis Pileggi has the details.

The bottom line is that where corporate directors are lawfully given the power to amend the bylaws without shareholder approval (such authority is often given in the company's certificate of incorporation), the Delaware courts will enforce them against the shareholders.  In a portion of the opinion quoted by Pileggi, the Court reasons:

… an unbroken line of decisions dating back several generations, [by] our Supreme Court has made clear that the bylaws constitute a binding part of the contract between the Delaware corporation and its stockholders.  Stockholders are on notice that, as to those subjects that are the subject of regulation by bylaw under 8 Del. C. § 109(b), the board itself may act unilaterally to adopt the bylaws addressing those subjects.

Shareholders should be aware that where such amendment authority is granted in the certificate of incorporation, the bylaws may be amended in ways they did not predict and would not have necessarily agreed to.