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Protect Your Personal Assets!!: Corporate Formalities Are Not Just Formalities, a Delaware Law Update (Part 2)

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Hill International, Inc. v. Opportunity Partners L.P.

In Hill Int’l, Inc. v. Opportunity Partners L.P., Hill asserted that its announcement in 2014 constituted prior public disclosure of the date of the 2015 annual meeting, and since this disclosure was made more than 70 days in advance, Opportunity’s proposals dated May 7, 2015, was untimely for failing to meet the 30-day-window requirement under the bylaws.[1] Opportunity argued that Hill first gave notice of the date of the annual meeting on April 30, 2015, because that was the first time Hill specifically identified June 9, 2015, as the actual date of its annual meeting, and since the notice was given less than 70 days in advance of the meeting, the 10-day notice period applied and its proposals dated May 7, 2015, were timely.[2]

The Court of Chancery looked at the advance notice provisions of Hill’s bylaws and concluded that “[t]he operative date for determining the time within which the stockholders must give notice is the actual date of the meeting.”[3] The Court of Chancery reasoned that stockholders must know when to show up so that a specific range of dates for compliance can be calculated and, thus, Hill’s announcement in 2014 did not trigger the 30-day-window.[4] Accordingly, the Court of Chancery ruled in favor of Opportunity, enjoining Hill from conducting any business at the annual meeting on June 9, 2015, other than convening the meeting for the sole purpose of adjourning it in order to permit Opportunity to present its proposals set forth in the May 7th notice at Hill’s 2015 annual meeting.[5]

The Delaware Supreme Court agreed. Noting that the bylaws of a Delaware corporation constitute part of a binding broader contract among the directors, officers and stockholders, the Supreme Court said that general rules of contract interpretation, which give simple and unambiguous words and phrases their commonly accepted meaning, applied here.[6] The Court held that the plain meaning of “the date” in Hill’s bylaws meant a specific day—not a range of possible days.[7] Because the 2014 proxy statement’s reference to “on or about June 10, 2015” did not refer to “the date” of Hill’s 2015 annual meeting, the Supreme Court said that it did not provide “prior public disclosure of the date” of Hill’s 2015 annual meeting.[8] Instead, the Supreme Court said, Hill publicly disclosed the actual date of its 2015 annual meeting for the first time when it filed its 2015 proxy statement on April 30, 2015, fixing the time and date of the meeting for 9:00 a.m. on June 9, 2015.[9] Because April 30 was only 40 days before the annual meeting, the Supreme Court held that Opportunity’s proposals dated May 7, 2015, were timely within the required 10-day notice period.[10] Accordingly, the Supreme Court affirmed the Court of Chancery’s ruling in favor of Opportunity.

This post was a part of a multi-part series on Hill International, Inc. v. Opportunity Partners L.P. and corporate formalities under Delaware law. You can find the other post by searching our blogs at www.mcbrideattorneys.com. If you have any questions about the content of this blog or other business law issues not discussed here, please contact us.

This posting is intended to be a planning tool to familiarize readers with some of the high-level issues discussed herein.  This is not meant to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances.  This article should not be treated as legal advice to any person or entity.

Steps have been taken to verify the contents of this article prior to publication.  However, readers should not, and may not, rely on this article.  Please consult with counsel to verify all contents and do not rely solely on this article in planning your legal transactions.

About the Author

Shawn McBride – R. Shawn McBride is the Managing Member of The R. Shawn McBride Law Office, P.L.L.C., which helps clients in legal issues related to starting companies, joint ventures, raising capital from and negotiating with investors and outside General Counsel functions. R. Shawn can be contacted at: (214) 418-0258; shawn.mcbride@rsmlawpllc.com, or www.mcbrideattorneys.com.

[1] Hill Int’l, Inc. v. Opportunity Partners L.P., No. 305,2015 (Del. July 2, 2015), at 5–6.

[2] Id. at 7–8 (emphasis in original).

[3] Id. at 8–9 (emphasis in original).

[4] Id. at 9–10.

[5] Id.

[6] Id. at 13–14.

[7] Id. at 17.

[8] Id.

[9] Id.

[10] Id. at 18.

Facebooktwittergoogle_pluslinkedinmailAbout the Author Shawn works successful, private business owners in their growth and missions to make a company that stands the test of time. You can email or call (214) 418-0258.

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