In Providence v. First Citizens Bancshares, Inc., Chancellor Bouchard dismissed a complaint contesting a merger because the acquiring company, First Citizens Bancshares, Inc. (“FC North”) had amended its bylaws the same day as the merger was announced to include a forum selection bylaw that required such claims to be brought in North Carolina. The Court found that the Delaware General Corporation Law grants broad powers to corporations, including the ability to amend bylaws by Board action, and that shareholders are on notice that the Board may do so. While previous Delaware authority had confirmed the validity of such forum selection bylaws generally, this decision was the first to address a forum selection bylaw that chose a state other than the state of incorporation, here, Delaware. The Court reasoned that nothing in Delaware law prohibited such a selection, and further that the plaintiffs did not question the integrity of North Carolina courts. Judicial review of the plaintiffs’ claims could occur, but only in a North Carolina court, not the Delaware Chancery court. Click here for the full opinion.
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