On April 29, 2026, the Delaware Supreme Court, sitting en banc, affirmed the Court of Chancery’s dismissal of consolidated stockholder challenges to advance notice bylaws adopted by The AES Corporation and Owens Corning. The court held that the as-applied equitable challenges to the advance notice bylaws were not ripe for judicial review due to the absence of an actual or threatened nomination dispute, despite the plaintiffs alleging that the bylaws were adopted for defensive purposes.
In 2023, both AES and Owens Corning amended their bylaws in response to the SEC’s adoption of Exchange Act Rule 14a-19 (the universal proxy rule). The amended bylaws shared several notable features: (1) each designated the advance notice provisions as the exclusive means for stockholder nominations; (2) each authorized the chair or presiding officer to disregard noncompliant nominations; (3) each contained broad “acting in concert” definitions extending to “conduct knowingly undertaken in parallel with another person toward a common goal,” along with “daisy chain” provisions deeming a person acting in concert with one actor to also be acting in concert with any third party of that actor; and (4) each imposed extensive ownership- and relationship-related disclosure requirements, covering derivative interests, legal proceedings, certain contracts or relationships, and performance-based fees.
Stockholders filed suit against each company seeking declaratory and injunctive relief. After the Delaware Supreme Court’s 2024 decision in Kellner v. AIM ImmunoTech Inc., each plaintiff amended their complaint to disclaim facial challenges and proceed solely on equitable, as-applied claims challenging the boards’ adoption of the bylaws. After consolidated motion practice, the Court of Chancery dismissed both amended complaints under Rule 12(b)(1) for lack of ripeness, reasoning that there was no “genuine, extant controversy” to support equitable review because the challenging stockholders could not “identify a stockholder who either intends to run a proxy contest” or is “chilled,” and “absent any proxy contest threat” the bylaws’ adoption was “not the kind of circumstance” that would trigger equitable review under Kellner.” The Delaware Supreme Court agreed.
The court reaffirmed Kellner’s holding that advance notice bylaws are “twice-tested” (first for legal authorization and second by equity) but emphasized that both forms of review require a dispute that is “ripe for judicial review.” While a facial validity challenge ripens once a bylaw is adopted and operative, because it presents a legal question answerable from the governing documents, an as-applied equitable challenge “stands differently.” Citing Stroud v. Grace, the court reiterated that there is no basis to invalidate a bylaw upon “some hypothetical abuse” and that a determination of validity “must await its actual use.”
The court acknowledged that Delaware courts have, in limited contexts, credited deterrence as a present harm, but distinguished those precedents on the ground that they involved self-executing economically coercive consequences that created ripeness: a poison pill causes immediate dilution if triggered, a fee-shifting bylaw imposes personal liability for attorneys’ fees, and a proxy put triggers automatic debt consequences tied to board change. By contrast, advance notice bylaws “principally impose[] procedural and disclosure obligations on a would-be nominator (and potential its ‘group’).” Without a nominator, the court reasoned, no court can assess who would be swept into an acting-in-concert group, what disclosures would be triggered, whether compliance would be feasible, or whether the company would reject a nomination.
The court noted that stockholders retain familiar tools to respond to aggressive bylaw regimes, including voting against directors, proposing bylaw amendments under DGCL § 109, waging “withhold” campaigns, and using Section 220 to investigate the board’s process. If a stockholder does decide to nominate directors, the required "real-world and extant dispute" required by Kellner will exist.
The decision reinforces that “clear day” advance notice bylaw amendments are not immune from equitable review, but stockholders must present a concrete nomination controversy (or at minimum plead non-conclusory facts regarding real-world deterrent effects) before a court will adjudicate an as-applied challenge. The decision preserves the possibility of future as-applied challenges once a genuine nomination dispute arises.