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An Introduction to the Law of Corporations: Cases and Materials, Fall 2017

DGCL Sec. 113 - Proxy Expense Bylaw

Headnote

Section 113 reduces the economic incentives against stockholders engaging in proxy contests by permitting expense reimbursement following proxy contest for successful candidates.

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TITLE 8

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Corporations

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CHAPTER 1. GENERAL CORPORATION LAW

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Subchapter I. Formation

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(a) The bylaws may provide for the reimbursement by the corporation of expenses incurred by a stockholder in soliciting proxies in connection with an election of directors, subject to such procedures or conditions as the bylaws may prescribe, including:

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(1) Conditioning eligibility for reimbursement upon the number or proportion of persons nominated by the stockholder seeking reimbursement or whether such stockholder previously sought reimbursement for similar expenses;

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(2) Limitations on the amount of reimbursement based upon the proportion of votes cast in favor of 1 or more of the persons nominated by the stockholder seeking reimbursement, or upon the amount spent by the corporation in soliciting proxies in connection with the election;

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(3) Limitations concerning elections of directors by cumulative voting pursuant to § 214 of this title; or

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(4) Any other lawful condition.

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(b) No bylaw so adopted shall apply to elections for which any record date precedes its adoption.

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77 Del. Laws, c. 14, § 2.;