Delaware Corporate Statute Amended to Override Much of Recent Chancery Court Decision Invalidating Certain Stockholder Agreement Corporate Governance Provisions
Date: 07/30/24
The Delaware legislature has passed and Governor John Carney has signed into law amendments to the Delaware General Corporation Law (the “DGCL”) intended to override significant portions of the Delaware Court of Chancery’s recent decision in West Palm Beach Firefighters’ Pension Fund, et al. v. Moelis & Company, No. 2023-0309-JTL (Del. Ch. Feb. 23, 2024). In that decision, Vice Chancellor J. Travis Laster held
that certain provisions of a stockholders agreement granting the principal stockholder rights to consent over a broad range of matters and to control various aspects of board composition were facially invalid on the basis that they violate Section 141(a) of the DGCL, which requires that a Delaware corporation be managed by its board of directors except as provided by statute or in the corporation’s certificate of incorporation. The DGCL amendments will become effective on August 1, 2024. The amendments are available here, and the Moelis decision is available here.
CGR Memo - Delaware Corporate Statute Amended to Override Much of Recent Chancery Court Decision Invalidating Certain Stockholder Agreement Corporate Governance Prov.pdf (pdf | 244.30 KB )