Delaware General Corporation Law

News & Analysis as of

Pitfalls of Delaware Corporate Law

In order to create the invaluable certainty that Delaware corporate law provides to boards of directors and stockholders with respect to corporate governance and capital structure, the General Corporation Law of the State of...more

Merger Price Is Best Evidence of Fair Value in Appraisal Action

The practice of a hedge fund buying shares in a Delaware corporation upon the announcement of a cash-out merger to then exercise appraisal rights, sometimes referred to as “appraisal arbitrage,” has generated controversy....more

Compliance with the Formal Approval Requirements of Delaware Law Required for Stockholder Ratification of Director Compensation

On October 28th, the Delaware Chancery Court, in Espinoza v. Zuckerberg, et al., held that stockholder ratification of a transaction that was approved by an interested board of directors must be accomplished formally through...more

Court Of Chancery Holds Section 205 Is Limited To Validating Action

In a case of first impression, the Court holds that Section 205 of the DGCL can only be used to validate defective corporate actions, not to declare an action invalid. While a similar claim might be made in a Section 225...more

Court Of Chancery Reverses Director Resignation

In this unusual case, the Court of Chancery has reinstated a director who was tricked into resigning. The opinion has a good discussion of how directors may resign and when their resignation is not effective....more

Chancellor Bouchard Rules There Can Be No Ratification Without Works

In reading Chancellor Andre G. Bouchard’s ruling yesterday in Espinoza v. Zuckerberg, 2015 Del. Ch. LEXIS 273 (Del. Ch. 2015), I was reminded of the theological debate among Christians concerning justification by faith.  The...more

Insights: The Delaware Edition - October 2015

We are pleased to share with you the inaugural issue of Insights: The Delaware Edition, a periodic publication addressing significant Delaware deal litigation and corporation law developments. In This Issue: - Q&A...more

"Delaware Supreme Court Reaffirms Important Protections for Corporate Directors"

A trio of opinions from the Delaware Supreme Court, each authored by Chief Justice Leo E. Strine, Jr., has reaffirmed Delaware’s deference to the business judgment of disinterested corporate decision-makers and restored...more

"Recent Amendments to the Delaware General Corporation Law Address Fee-Shifting and Forum Selection Provisions"

It has become almost axiomatic that when a public company merger is announced, stockholder litigation quickly follows. In recent years, some studies have indicated that more than 90 percent of transactions valued at more than...more

What's Market? Update: Delaware Corporate and M&A

Fee Shifting and Forum Selection Clauses - Much attention has been paid to Delaware legislative developments regarding fee shifting and forum selection clauses. On June 24, 2015, Delaware Governor Jack Markell signed...more

What's Market? Update: Maryland REIT

For many years, it was assumed and accepted that Delaware corporate law was more advantageous to corporations than the corporate law of other states. While Delaware case law regarding corporations is still more developed...more

Update from Wilson Elser’s D&O Insurance Digest

Litigation Developments and Mega Settlements - Dole Food, Inc. Derivative Action – Delaware Chancery Court Finds D&Os Engaged in Fraud - Dole Food, Inc. shareholders sued Dole Chairman and CEO David Murdock and Dole...more

Charney v. American Apparel, Inc., C.A. No. 11098-CB (Del. Ch. Sept. 11, 2015) (Bouchard, C.)

In this opinion, the Court of Chancery held that Dov Charney (“Charney”), the former CEO of American Apparel, Inc. (the “Company”), was not entitled to advancement of litigation fees and expenses under either the Company’s...more

Delaware Supreme Court Addresses Novel Controlling-Stockholder Claim and Clarifies Effect of a Fully Informed, Uncoerced...

The Delaware Supreme Court recently issued an opinion, captioned Corwin v. KKR Financial Holdings LLC, that sheds further light on when a stockholder owning less than 50% of the voting power of a company may be deemed a...more

Delaware's One-Two Punch to M&A Litigation Disrupts the Cozy Status Quo of M&A Deal Settlements

Over the summer, Delaware in two separate and impactful decisions hit out at many, if not most, shareholder litigation suits challenging public company M&A suits. The result: uncertainty ahead. The customary rhythm in an...more

Benefit Corporation Files For Initial Public Offering

A few years ago, I participated in the drafting of California’s Flexible Purpose Corporation Act, Cal. Corp. Code § 2500 et seq.  In 2014, the legislature changed the name to “Social Purpose Corporations Act”.  SB 1301...more

The Delaware Court Of Chancery’s Not So Exclusive Jurisdiction

Section 145(k) of the Delaware General Corporation Law is quite clear and emphatic about which court may hear actions for indemnification or advancement of expenses: The Court of Chancery is hereby vested with exclusive...more

Defectively Issued Stock Declared Valid After Section 205 Analysis

Corporations are operated by humans, at least until the rise of Skynet (infamous as a primary antagonist in the Terminator movie franchise). As humans are prone to err, corporate acts may also be executed in error. In 2014,...more

What is a Public Benefit Corporation Anyway?

Kickstarter, the well-known crowdfunding website, recently made news by announcing that it has become a Delaware “public benefit corporation” under that state’s new (2013) PBC statute. For example, a New York Times headline...more

2015 Guide to Acquiring US Public Companies

This guide summarizes certain important considerations for acquiring a publicly traded US-based target corporation through a negotiated (i.e. “non-hostile”) tender offer, exchange offer or merger. US public companies are...more

Court of Chancery Affirms Director Primacy in Delaware Corporate Law

The Court of Chancery recently affirmed the primacy of the board of directors in Delaware corporate law in a case that involved an attempt by the majority stockholder of a Delaware corporation to amend the corporation’s...more

Nevada Enacts Provisions Permitting Ratification Of Corporate Acts

Etymologically, one might view the meaning of “ratify” as to make as one had thought.  It is derived from two Latin words – ratus (the past participle of the verb meaning to think) and facere (the infinitive of the verb...more

Court Poised To Decide Whether Directors Are Agents

Not quite four years ago, I wrote about whether directors are agents. The post was prompted by then Chancellor William B. Chandler III’s assertion...more

New Delaware Decision Strikes Bylaw Empowering Stockholders to Remove Officers

In a case of first impression, the Delaware Court of Chancery recently struck down a provision contained in the bylaws of a Delaware corporation authorizing the corporation’s stockholders to remove a corporate officer (in the...more

Recent DGCL Amendments of Note

The Delaware General Assembly recently amended Delaware’s corporate statutes in several respects of interest to public companies. Boards may delegate stock issuances to non-directors....more

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