Openwave Sys. v. Harbinger and Advance Notice Bylaws

In Openwave Sys. v. Harbinger Capital Ptnrs. Master Fund I, Ltd., 2007 Del. Ch. LEXIS 34 (Del. Ch. 2007), Harbinger, a hedge fund, attempted to nominate two candidates for election to the Openwave board. Openwave asserted that the nominees did not meet either of two advance notification bylaws for director nominations but nonetheless allowed the names to appear on the ballot, expressly reserving the right to subsequently challenge the nominations. When one of the Harbingner nominees received the most number of votes, an action was instituted under Section 225, a provision that allows accelerated review of challenges to board elections.

The Court of Chancery first reaffirmed its deep concern over the franchise rights of stockholders and noted that Delaware courts were "'vigilant in policing fiduciary misconduct that has the effect of impeding or interfering with the effectiveness of a stockholder vote.'" The court noted that "there is little question that the bylaws at issue are poorly drafted and could easily lead to some confusion where, as is true in this case, the date of the annual meeting is delayed due to circumstances beyond the control of the board of directors." Nonetheless, the Chancery Court concluded that the matter could not be resolved on motion but instead required a trial, particularly "because the outcome may well turn on an assessment of the overall equities of the parties' conduct."

The primary material for this case may be found on the DU Corporate Governance website.