A non-reciprocal fee-shifting bylaw doesn't apply to a former shareholder's challenge to a reverse stock split of 10,000-to-1, the Delaware Court of Chancery has ruled.

In Strougo v. Hollander, a 23-page opinion filed Monday, Chancellor Andre G. Bouchard said the bylaw did not apply in the case because it was adopted after the challenger sold his stock in the company. He also said Section 109(b) of the Delaware General Corporation Law does not authorize a bylaw that regulates the rights of a stockholder whose equity interest had been eliminated before the bylaw was adopted.

The decision was not a pronouncement on the validity of the fee-shifting bylaw under Delaware law, applying only to the case of a former shareholder who had no equity stake at the precise time the bylaw was adopted, Bouchard said. The chancellor, however, listed a series of questions about fee-shifting bylaws that the court did not have to answer.