Court of Chancery Reaffirms High Bar for Challenging Advance Notice Bylaws, but Emphasizes the Importance of Clear Drafting
On August 25, 2025, the Delaware Court of Chancery in Carroll v. Burstein dismissed a stockholder’s facial challenge to the advance notice bylaw of Stoke Therapeutics, Inc. (Stoke). An advance notice bylaw requires a stockholder to provide a company advance notice of its intention to nominate a director candidate or submit a proposal for approval by stockholders. The decision adds to the growing body of caselaw governing advance notice bylaws in the wake of Kellner v. AIM ImmunoTech Inc., 320 A.3d 239 (Del. 2024) (Kellner II), which held that a bylaw is facially invalid only if it cannot operate lawfully under any circumstance. In addition, Carroll offers an important reminder to companies of the need for careful bylaw drafting to promote clarity and foster sound corporate governance.
Background
In 2019, Stoke, a Delaware-incorporated biotechnology company, adopted restated bylaws in connection with its initial public offering, including an advance notice bylaw governing how stockholders may nominate directors. Op. at 2.[1] As relevant here, the provision required certain disclosures by a “Proposing Person” in a notice of nomination. Id. at 11. The bylaw defined “Proposing Person” to include “Associated Person[s]” on whose behalf the nomination was made, and “Associated Person,” in turn, was defined to include any person “Acting in Concert” with the “Associated Person.” Id. A person “Acting in Concert” was one who “knowingly acts . . . in concert with, or toward a common goal relating to the management, governance, or control of the corporation in substantial parallel. . . . ” Id. at 12. The definition further provided that “stockholders are Acting in Concert with one another by separately and independently Acting in Concert with the same third party.” Id. at 13.
In March 2024, Ryan Carroll, a Stoke stockholder, brought a putative class action alleging that Stoke’s advance notice bylaw was invalid on its face because it was “impossible to comply with” and “unintelligible.” Op. at 5, 13. The litigation arose amid a surge of post-Kellner lawsuits. Id. at 4. In Kellner v. AIM ImmunoTech Inc., 307 A.3d 998 (Del. Ch. 2023) (Kellner I), the Court of Chancery struck down certain of AIM ImmunoTech’s advance notice bylaws as invalid and unenforceable. Id. The Delaware Supreme Court’s subsequent decision in Kellner II partly affirmed and partly reversed, clarifying that, when challenging the validity of a bylaw adopted on a “clear day”—i.e., when no proxy contest was known to be imminent—a plaintiff must show the bylaw “cannot operate lawfully under any set of circumstances.” Id. at 5, 13 (emphasis in original).
Acknowledging that Stoke’s advance notice bylaw was adopted on a “clear day,” and no stockholder had actually submitted or was contemplating a director nomination under it, Carroll presented a purely facial challenge to the bylaw. Id. at 7, 8. Specifically, Carroll targeted the bylaw’s “Acting in Concert” definition. Carroll argued that the so-called “wolf pack” and “daisy chain” clauses of the definition—deeming persons acting in “substantial parallel” or through a common intermediary to be acting in concert—could require nominating stockholders to disclose unknown persons, thereby rendering the right to nominate illusory. Id. at 12-13.
Stoke’s Motion to Dismiss and the Court’s Analysis
Stoke moved to dismiss Carroll’s suit in December 2024. In upholding the validity of the bylaw and dismissing plaintiff’s complaint with prejudice, the Court of Chancery first considered whether the plaintiff’s claim met the “high bar” set forth in Kellner II—i.e., whether the bylaw could “operate lawfully under any set of circumstances.” Op. at 13. The court observed that there were straightforward scenarios in which a stockholder could comply with the bylaw. Id. at 15. For instance, a stockholder acting alone, without coordination with others, could easily meet the bylaw’s requirements because there would be no additional relationships to disclose. Id. Likewise, a stockholder working openly with a single other person could comply by disclosing that known relationship. Id. Because these examples demonstrated at least some circumstances where the bylaw could operate lawfully, the court held that the plaintiff’s facial challenge necessarily failed. Id. at 16.
The court next turned to Carroll’s argument that the bylaw was so dense and convoluted that it was “unintelligible.” Id. The court rejected that argument as well. Id. While acknowledging that the bylaw’s language was “broad and dense—even muddled,” the court explained that it was not comparable to the provision struck down in Kellner I, which was a 1,099-word run-on sentence with 13 subsections. Id. at 16, 18. By contrast, the court found that one could “parse through” Stoke’s bylaw and discern its purpose. Id. at 18. That distinction was sufficient to conclude that the provision could not be deemed facially invalid on the grounds of unintelligibility. Id.
The court concluded its opinion with a cautionary footnote, observing that portions of Stoke’s bylaw were “suboptimal,” and emphasizing that “good corporate governance counsels in favor of clear and straightforward bylaws.” Id. at 18 n.81. The decision underscores that, while complex bylaws may survive facial scrutiny under certain facts, companies should not view that as license to adopt dense or confusing provisions. Carroll instead serves as a useful reminder for companies to periodically assess their advance notice bylaws to ensure they are drafted clearly, balance stockholder interests with the board’s need for relevant information, and minimize litigation risk. Counsel can help companies identify bylaw provisions that may create ambiguity and align them with current best practices under Delaware law.
[1] “Op.” refers to citations to the Court of Chancery’s opinion in Carroll v. Burstein, C.A. No. 2024-0317-LWW (Del. Ch. Aug. 25, 2025).
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