AB Value Partners, LP v. Kreisler Manufacturing Corporation

Court of Chancery of the State of Delaware · 2014 · Corporations

Updated August 22, 2026

CorporationsAdvance notice bylawsStockholder voting rightsInjunctive reliefadvance notice bylawtemporary restraining ordermandatory injunctionSchnell

Facts

Kreisler's bylaws required stockholders seeking to nominate directors at the annual meeting to give notice 60 to 90 days before the anniversary of the previous annual meeting, making October 18, 2014 the deadline for the 2014 meeting. AB Value, an 11.1% stockholder, admittedly did not comply with that advance notice bylaw but argued that later events made enforcement inequitable. It pointed to the post-deadline distribution of shares previously held in a trust, a December 5 board-approved salary increase for the two Stern managers, and errors in the company's annual meeting notice. The board had adopted the bylaw years earlier on a clear day, and no party challenged the bylaw as facially invalid or ambiguous.

Issue

Whether the Court of Chancery should enjoin enforcement of Kreisler's otherwise valid advance notice bylaw because post-deadline events allegedly made its application inequitable and deprived stockholders of a fair opportunity to nominate an opposing slate. Also, whether AB Value showed the merits necessary for TRO relief that would effectively grant it substantially all the relief it sought.

Rule

Advance notice bylaws are generally valid and useful for orderly stockholder meetings, but they may be enjoined if they unduly restrict the stockholder franchise or are applied inequitably. To obtain equitable relief against a facially valid advance notice bylaw under Schnell and Hubbard, a plaintiff must show compelling circumstances demonstrating that, because of board action or inaction occurring after the notice deadline, the company experienced a material or radical change in direction such that stockholders need a fair opportunity to nominate an opposing slate. Where a TRO would effectively grant substantially all ultimate relief or operates as a mandatory injunction, the plaintiff must make more than a minimal merits showing, and here at least must present a colorable claim.

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Lakefront Robotics, Inc., a Delaware corporation based in Chicago, adopted a 75-day advance notice bylaw six years ago. After the nomination deadline passed, its board approved a sale of the company’s core operating division and announced that the company would pivot from manufacturing drones to licensing software only; the board then refused stockholder Maya Patel’s request to nominate an opposing slate for the annual meeting in two weeks.

If Maya seeks to enjoin enforcement of the bylaw, which fact most strongly supports a colorable claim for equitable relief?

Explanation. A facially valid advance notice bylaw may be enjoined only in compelling circumstances. The key showing is a post-deadline, board-caused, material or radical change in corporate direction such that stockholders need a fair opportunity to nominate an opposing slate. A clear-day adoption generally supports validity, noncompliance alone does not help the stockholder, and proximity of the meeting does not itself make enforcement inequitable. (Derived from AB Value Partners, LP v. Kreisler Manufacturing Corporation (n.d.).)