Should Your Company Adopt A Forum Selection Bylaw?

In light of the Delaware Chancery Court’s decision this week upholding the validity of board-approved forum selection bylaws that require substantially all litigation between a company and its stockholders to be brought in Delaware, the question is whether boards should adopt such provisions and, if so, when? While there are significant benefits to such provisions, particularly the avoidance of litigation on the same or overlapping claims in multiple jurisdictions, companies and their boards should also consider other factors including the uncertain and potentially unfavorable response from some stockholders and the proxy advisory firms.