The End of Shareholder Litigation: Using Bylaw or Charter Amendments to Require Binding Arbitration of Shareholder Disputes by Paul D. Weitzel analyzes whether a bylaw or charter provision that requires arbitration for all shareholder disputes would be enforceable. He finds that it would be and provides a model provision for inclusion in charters or bylaws.
The inefficiencies of shareholder litigation imposes tremendous costs on shareholders. By pushing that litigation into arbitration, shareholders can avoid the costs of strike suits and can more rapidly resolve meritorious suits.
This can be accomplished through an amendment to either the charter or bylaws, which will likely be considered a contract that binds shareholders. The Federal Arbitration Act will enforce such a provision, and it is unlikely that any defense will apply.
Comments are closed.