Delaware Court Invalidates Portions of Stockholder Agreement
A Delaware Court of Chancery decision to invalidate significant portions of a stockholder agreement could have a marked impact on public companies, impacting M&A activities such as joint ventures, settlements with activist investors and minority venture capital investments.
March 18, 2024 at 10:00 AM
7 minute read
Expert Analysis
A Delaware Court of Chancery decision to invalidate significant portions of a stockholder agreement could have a marked impact on public companies, impacting M&A activities such as joint ventures, settlements with activist investors and minority venture capital investments.
Steve Quinlivan, partner at Stinson LLP. Courtesy Photo
In West Palm Beach Firefighters' Pension Fund v. Moelis & Co., No. 2023-0309-JTL (Del. Ch. Feb. 23, 2024), the court found the agreement ran afoul of Delaware General Corporation Law (DGCL) Section 141(a), which states, "The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors, except as may be otherwise provided in this chapter or in its certificate of incorporation."
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