Activists are Hereby on Notice: Board Authority to Reject Deficient Director Nominations

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2018-04-16

Posted by Kai Haakon Liekefett, Andrew W. Stern, and Beth E. Peev, Sidley Austin LLP, on Monday, April 16, 2018
Editor's Note: Kai Haakon Liekefett, Andrew W. Stern, and Beth E. Peev are partners at Sidley Austin LLP. This post is based on a Sidley publication authored by Mr. Liekefett, Mr. Stern, Ms. Peev, and Charlotte K. Newell.

In a closely watched decision, the Superior Court of Washington for King County in Blue Lion Opportunity Master Fund, L.P. vs. HomeStreet, Inc., No. 18-2-06791-0 SEA, affirmed the authority of a corporation’s board of directors to reject a notice of director nominations and shareholder proposals for failure to comply with an advance notice bylaw.

In the case, HomeStreet, Inc., a Washington corporation and parent of HomeStreet Bank, received a purported notice from an activist, Blue Lion Opportunity Master Fund, L.P., stating Blue Lion’s intention to nominate two director candidates and submit three shareholder proposals at HomeStreet’s 2018 annual meeting. Blue Lion delivered its notice in the late afternoon on Friday, February 23, the eve of the deadline for such notices under HomeStreet’s advance notice bylaw.