Proposed Nevada Legislation Introduces Fee-Shifting in Shareholder Litigation

A short time ago, a storm of controversy briefly emerged after a Delaware court endorsed a firm’s adoption of a fee-shifting bylaw. The controversy quieted down after the Delaware legislature adopted a statutory provision prohibiting fee-shifting bylaws. The fee-shifting provision controversy could be back, albeit this time in a different state. A Nevada legislator has introduced a bill in the state senate that would explicitly allow Nevada corporations to adopt  provisions requiring fee-shifting in unsuccessful M&A litigation, as long as the deals were approved by a shareholder majority. University of Nevada Las Vegas Law School Professor Benjamin Edwards describes the legislation in a March 18, 2019 post on the Business Law Prof Blog (here).   On March 18, 2018, Senator Yvanna Cancela introduced Senate Bill 304 in the Nevada state senate. Section 5 of the proposed legislation authorizes Nevada corporations to adopt certain provisions in their articles…

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