‘Tis the season, for activist investors to plot and scheme at crappy, poorly-performing portfolio companies and the entrenched BoD and executives.

If the plan includes director nominations, bylaw amendments, or resolutions, then much lies between now and the annual shareholder meeting in 2016. In particular, many intricate rules apply to the process of nominating directors or proposing bylaw amendments and resolutions.

That process typically requires a shareholder to notify the company of that intent, months before the annual shareholder meeting. Under the pretense of assuring an orderly meeting, these rules give a company ample opportunity to exclude nominees, amendments, and resolutions from the meeting agenda.

You can’t just show up at the annual meeting and move to consider the item from the floor. You need to notify the company within a strict schedule, supply exactly the required data and documents, and update the notice at precisely the right time.

We put together a guide to these advance notice bylaw provisions. We explain some of the underlying law, and identify the principal features of advance notice.

We wanted to create this resource for awhile. Recent adverse experience, involving with Phil Goldstein and Bulldog Investors at a portfolio company, motivated us.

Earlier this year, Bulldog proposed director nominees and resolutions at a pair of closed-end funds. The funds used advance notice provisions to try to block the nominations. These provisions featured a extensive questionnaire for each nominee, including “name...of any other shareholder...supporting the nominee.” Phil wondered what business purpose this could possibly serve, other than to “assemble a dossier on our nominees for partisan purposes.”

Regrettably, investors have little recourse:

1. ❖State law (Delaware and others) allow advance notice terms in corporate bylaws, with few limits
   

2. ❖The intricacies provide all manner of obstacles to shareholder BoD nominations and proposals
   

3. ❖The SEC lacks jurisdiction over these terms, so a shareholder can only sue in state court over an abusive application of these terms
   

4. ❖And, these state courts tend to favor companies in interpreting them.
   

Our only suggestion is, read the bylaws thoroughly, and prepare to jump through many hoops.