Court Of Chancery Permits Limits On Advancement
This decision illustrates the need for careful drafting of bylaws regarding advancement rights. The plaintiff claimed entitlement to mandatory advancement under the Company's bylaws. However, the bylaws also provided that advancement was required "unless" the Board decided otherwise. The Court held that the word "unless" made advancement discretionary. In contrast, a different bylaw that made advancement subject to board approval has been held to be mandatory so long as the request met the board's technical requirements as to the form of the requested advancement. A word can make a lot of difference.