Richards, Layton & Finger’s multi-disciplinary corporate governance lawyers, drawing on their deep experience in both the boardroom and the courtroom, help corporations and boards of directors navigate the ever-changing corporate governance landscape. Our corporate governance team advises clients concerning everything from day-to-day corporate governance, oversight, and disclosure issues to the most challenging corporate governance problems, including internal corporate investigations, proxy fights, and activist campaigns. Richards Layton’s corporate governance litigators have litigated leading cases that have contributed to the development of corporate governance law.
Trulia 2.0? The Case for a ‘Plainly Beneficial’ Standard
Delaware Business Court Insider | November 11, 2024
In 2016, the Delaware Court of Chancery held in In re Trulia Inc. Stockholder Litigation that what it called “disclosure settlements”—settlements in which a class of stockholders solely received supplemental proxy disclosures in exchange for a classwide release of claims—“would be met with continued disfavor unless the supplemental disclosures address a plainly material misrepresentation or…
The Perils of Adjudicated Fraud
Business Law Today | October 21, 2024
Directors and officers of Delaware corporations often benefit from a robust suite of liability protections that generally include exculpation rights, indemnification rights, rights to recoup expenses incurred while defending a proceeding in advance of its final disposition (or “advancement” rights), and rights under director and officer (D&O) liability insurance policies. While each aspect of this so-called…
Delaware Journal of Corporate Law | 2024
In early 2023, the Delaware Court of Chancery was inundated with petitions under Section 205 of the DGCL filed by former SPACs seeking to have their capital structures validated after the Court. The petitions followed a ruling granting a fee award in Garfield v. Boxed, Inc., in which the Court found a challenge to the…
2024 Amendments to the Delaware General Corporation Law
Insights | September 2024
On July 17, 2024, the Governor of the State of Delaware signed legislation enacting several significant changes to the Delaware General Corporation Law (DGCL). The 2024 amendments became effective on August 1, 2024, and apply to all contracts made by a corporation, all agreements, instruments or documents approved by the board of directors, and all agreements…
‘MFW’ Just Turned 10, but Is It Worth the Candle?
Delaware Business Court Insider | July 3, 2024
In 2014, the Delaware Supreme Court held in Kahn v. M&F Worldwide (MFW) that the business judgment rule applies to a transaction that would otherwise be subject to the exacting entire fairness standard of review due to the presence of a conflicted controlling stockholder so long as the parties condition the transaction at the outset…
2024 Proposed Amendments to the General Corporation Law of the State of Delaware
March 28, 2024
Legislation proposing to amend the General Corporation Law of the State of Delaware (the “DGCL”) has been approved by the Council of the Corporation Law Section of the Delaware State Bar Association and is expected to be introduced to the Delaware General Assembly for consideration during its 2024 regular session. If enacted, the 2024 amendments will,…
Recent Developments in Delaware Corporate Law
Spring 2024
125 Years of Helping Clients Navigate the Intricacies of Delaware Corporate Law Richards, Layton & Finger has been defining Delaware law since 1899. Continuing our long tradition of providing insight into the evolution of our state’s influential laws, this publication highlights recent Delaware corporate and alternative entity cases as well as statutory developments in our state.Our…
Delaware Business Court Insider | February 14, 2024
In Grabski v. Andreessen, C.A. No. 2023-0464-KSJM (Del. Ch. Feb. 1, 2024), the Delaware Court of Chancery declined to dismiss fiduciary claims against officers and directors of Coinbase Global, Inc. who sold shares in a going-public transaction. In the opinion, the court, which has in recent years decided a number of cases involving companies going public…
Delaware Laws & Programs Affecting Business – 2024 Edition
2024
Delaware Laws & Programs Affecting Business presents an introduction to Delaware and an overview of the laws and programs relating to doing business in the state. Our economy is diverse, and our legal framework is intentionally crafted to foster robust business activity. Our widely copied business laws lead the nation in clarity and predictability. Government…
January 2, 2024
In Kellner v. AIM ImmunoTech Inc., C.A. 2023-0879-LWW (Del. Ch. Dec. 28, 2023), the Delaware Court of Chancery upheld an incumbent board’s rejection of a group of dissidents’ nominees for a corporation’s 2023 annual meeting, finding that the dissidents failed to comply with the requirements of the corporation’s advance notice bylaws. Despite upholding the rejection of…
The Nature of Fiduciary Duties Owed to Limited-Life Corporations
Business Law Today | December 13, 2023
The fiduciary duties of directors of a Delaware corporation are frequently summarized as follows: “[T]he fiduciary relationship requires that the directors act prudently, loyally, and in good faith to maximize the value of the corporation over the long-term.” Embedded within that formulation is a temporal element: the duty is tied to the deliberately amorphous “long term”…
Court of Chancery Clarifies the Scope of Disclosure Liability in Novel Contexts
Delaware Business Court Insider | November 15, 2023
Under Delaware law, corporate fiduciaries owe an affirmative duty of disclosure when seeking stockholder action—including, for example, presenting a matter for stockholder approval or proposing a transaction that otherwise requires stockholders to make an investment decision, such as whether to seek appraisal or participate in a corporation’s self-tender. In these circumstances, directors owe an affirmative duty…
Court of Chancery Addresses Enforceability of “ConEd Provisions” Under Delaware Law
November 2, 2023
In what may be the last opinion from the Delaware Court of Chancery relating to Elon Musk’s acquisition of the company formerly known as Twitter, Crispo v. Musk, C.A. No. 2022- 0666-KSJM (Del. Ch. Oct. 31, 2023), the Court rejected a mootness fee petition brought by a former Twitter stockholder. The former stockholder, who brought suit…
Department of Insurance Provides Guidance for Side A D&O Captives
October 16, 2023
Section 145(g) of the Delaware General Corporation Law was amended in 2022 to authorize Delaware corporations to use captive insurance, subject to a limited set of minimum exclusions, to protect directors, officers and certain other covered persons against liability, even if the corporations would not be empowered to indemnify them. Such insurance for non-indemnifiable claims is…
Recent Complaint Unsuccessfully Challenged ‘Standard Plain Vanilla’ Rights Plan
Delaware Business Court Insider | August 16, 2023
In Building Trades Pension Fund of Western Pennsylvania v. Desktop Metal, a stockholder plaintiff brought derivative claims against Desktop Metal, Inc., alleging that a provision of the company’s rights plan, which was adopted in connection with a proposed merger transaction, impermissibly chilled the free exercise of stockholder voting with respect to the merger agreement at an…
Guidance on Drafting Proxies Under Delaware Law
Delaware Business Court Insider | June 14, 2023
As the Delaware Supreme Court recently reaffirmed in Daniel v. Hawkins, 289 A.3d 631 (Del. 2023), proxies are generally construed narrowly under Delaware law. In light of these principles of strict construction, proxies in voting and support agreements, secured debt instruments, and other corporate documents should be drafted in a manner that fully reflects the intended…
2023 Proposed Amendments to the General Corporation Law of the State of Delaware
May 1, 2023
Legislation proposing to amend the General Corporation Law of the State of Delaware (the “DGCL”) is expected to be introduced to the Delaware General Assembly for consideration during its 2023 regular session. If enacted, the 2023 amendments to the DGCL will, among other things, make the following changes: Sections 152, 153 and 157 (as well as…
Business Law Today | March 9, 2023
The fiduciary duty of oversight has been one of the hottest topics of discussion among practitioners and boards of directors since it was thrust back into the limelight by the Delaware Supreme Court’s decision in Marchand v. Barnhill. In Marchand, the Delaware Supreme Court reversed a decision by the Delaware Court of Chancery to dismiss,…
‘In re Lordstown Motors’: Providing Relief From ‘Untold Chaos’
Delaware Business Court Insider | March 1, 2023
In In re Lordstown Motors, the Delaware Court of Chancery provides a roadmap for former special purpose acquisition companies (SPACs) to validate capital structure uncertainties stemming from the same court’s recent decision in Garfield v. Boxed. In Lordstown, the court makes clear that Section 205 of the Delaware General Corporation Law (the DGCL) is available as…
Recent Developments in Delaware Corporate Law
Spring 2023
This publication, which highlights recent corporate and alternative entity cases and statutory developments in Delaware, continues our long tradition of providing insight into the evolution of Delaware law. Our corporate and alternative entities teams, the largest and most recognized in the state, play a crucial role in Delaware. For decades we have contributed to the development…
Three Lessons From Three Years of Post-‘Marchand’ Caselaw
Delaware Business Court Insider | November 16, 2022
Just over three years ago, the Delaware Supreme Court held in Marchand v. Barnhill that the failure to maintain an internal monitoring system that could have prevented a deadly listeria outbreak gave rise to an actionable oversight claim against the board of directors under In re Caremark International Inc. Derivative Litigation. Although the Delaware Supreme Court…
Amendments to the DGCL Permit Officer Exculpation
Insights | October 2022
On August 1, 2022, Section 102(b)(7) of the Delaware General Corporation Law (the DGCL) was amended to permit a corporation to include in its certificate of incorporation a provision to eliminate or limit the monetary liability of certain corporate officers for breach of the duty of care. Previously, the protection afforded by a so-called exculpatory provision…
The Relevance of Commercial Reality in Interpreting Charters and Bylaws
Delaware Business Court Insider | August 17, 2022
Where a literal reading yields a result at odds with what the drafters would have reasonably intended (which itself derives from the commercial context evidenced in plain terms throughout the instrument), literal meaning gives way to a more nuanced “objective” meaning. This article explores the application of this key precept in the interpretation of charters and…
The Failure of the ‘Failing Business’ Exception Under Delaware Law
Delaware Business Court Insider | June 22, 2022
In Stream TV Networks v. SeeCubic, the Delaware Supreme Court vacated a permanent injunction imposed by the Delaware Court of Chancery that prohibited Stream TV Networks, Inc. and the Rajan brothers, who collectively held a majority of the company’s stock, from blocking a negotiated transfer of all of Stream’s assets to satisfy its secured creditors. In…
2022 Proposed Amendments to the General Corporation Law of the State of Delaware
April 21, 2022
Legislation proposing to amend the General Corporation Law of the State of Delaware (the “DGCL”) is expected to be introduced to the Delaware General Assembly for consideration during its 2022 regular session. If enacted, the 2022 amendments to the DGCL will, among other things, (i) enable corporations to include in their certificates of incorporation provisions exculpating…
Realigning Stockholder Inspection Rights
Stanford Journal of Law, Business, and Finance | Spring 2022
Access to corporate information plays a pivotal role in stockholder litigation. One key to that access is stockholders’ statutory right to inspect a corporation’s books and records prior to filing litigation, enshrined in the Delaware General Corporation Law’s Section 220. In the context of derivative actions brought by a stockholder on behalf of a company, Section…
Delaware Custodians, Receivers and Trustees (Oh My!)
Delaware Business Court Insider | March 9, 2022
Under Delaware law, the board of directors is generally responsible for overseeing the business and affairs of the corporation. However, where the board is incapable or unwilling to act and in other unique circumstances described below, the Delaware General Corporation Law allows stockholders, directors, creditors and other interested parties to attempt to displace the board’s decision-making…
Recent Developments in Delaware Corporate Law
Spring 2022
This publication, which highlights recent corporate and alternative entity cases and statutory developments in Delaware, continues our long tradition of providing insight into the evolution of Delaware law. Our corporate and alternative entities teams, the largest and most recognized in the state, play a crucial role in Delaware. For decades we have contributed to the development…
Amendments to the DGCL Permit Captive D&O Insurance
The Harvard Law School Forum on Corporate Governance | February 24, 2022
The Delaware General Assembly has approved legislation amending Section 145 of the Delaware General Corporation Law (the “DGCL”) to authorize a Delaware corporation to use captive insurance, which is generally defined as insurance provided by or through a wholly-owned subsidiary funded by the corporation, to protect its current and former directors, officers and other indemnifiable persons…
Amendments to the DGCL Permit Captive D&O Insurance
January 28, 2022
The Delaware General Assembly has approved legislation amending Section 145 of the Delaware General Corporation Law (the “DGCL”) to authorize a Delaware corporation to use captive insurance, which is generally defined as insurance provided by or through a wholly-owned subsidiary funded by the corporation, to protect its current and former directors, officers and other indemnifiable persons…
Rosenbaum v. CytoDyn Inc.: A Review of Advance Notice Bylaws
Insights | December 2021
In Rosenbaum v. CytoDyn Inc., the Delaware Court of Chancery denied an insurgent group’s challenge to the rejection of their notice of director nominations by CytoDyn Inc. The Court’s opinion brings some clarity to an area of the law that “may not be as settled as one would think,” providing a framework for reviewing actions taken…
Dodd-Frank and Corporate Governance
Directors & Boards | 2021 Fourth Quarter
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) was enacted in response to perceived excesses and other dysfunction in the financial markets that precipitated the 2008 financial crisis. The public discourse surrounding the adoption and implementation of Dodd-Frank — including the notion that institutions deemed “too big to fail,” unless appropriately restrained, would take…
SPAC Mergers Challenged for an Alleged Statutory Foot-Fault
Delaware Business Court Insider | November 17, 2021
Stockholder-plaintiffs have filed a number of complaints in the Delaware Court of Chancery challenging at least five mergers involving Delaware special purpose acquisition companies (SPACs) in the last four months alleging that the SPAC’s failure to solicit a “class vote” of the SPAC’s Class A Common stockholders in connection with certain amendments to the SPAC’s certificate…
Business Law Today | November 1, 2021
The corporation laws of every U.S. jurisdiction permit corporations on the “clear day” (i.e., before an adverse claim arises) to agree to advance defense costs, indemnify, and insure presumptively innocent directors and officers against risks of liability that arise out of their good faith service to the corporation. States’ laws governing alternative entities generally leave the…
Three Opinions on Fraud on the Board
Harvard Law School Forum on Corporate Governance | September 8, 2021
In a footnote in a two-page order issued in 2018, the Delaware Supreme Court quietly reminded corporate law practitioners that, per the 1989 case of Mills Acquisition v. Macmillan, a complaint seeking post-closing Revlon damages can survive a motion to dismiss without pleading nonexculpated breaches of fiduciary duty by a majority of directors so long as…
What Is Fraud on the Board? 3 Opinions Seek to Answer That Question
Delaware Business Court Insider | August 18, 2021
In a footnote in a two-page order issued in 2018, the Delaware Supreme Court quietly reminded corporate law practitioners that, per the 1989 case of Mills Acquisition v. Macmillan, a complaint seeking post-closing Revlon damages can survive a motion to dismiss without pleading nonexculpated breaches of fiduciary duty by a majority of directors so long…
The Shifting Landscape and Proliferation of Books and Records Demands in Delaware
Delaware Business Court Insider | June 23, 2021
Section 220 of the General Corporation Law of the State of Delaware provides stockholders with the right to inspect the books and records of a corporation for a “proper purpose” that is “reasonably related to such person’s interest as a stockholder.” Delaware courts have long urged stockholders to utilize Section 220 investigations as one of the…
Insights | June 2021
Proposed legislation would amend the Delaware General Corporation Law, the Delaware Limited Liability Company Act, the Delaware Revised Uniform Limited Partnership Act and the Delaware Revised Uniform Partnership Act to clarify, among other things, the treatmentof capital stock owned by the corporation, provide a safe harbor procedure for the ratification of void and voidable acts and…
The Delaware Court of Chancery Enjoins “Extreme, Unprecedented” Stockholder Rights Plan
Insights | March 2021
In The Williams Companies Stockholder Litigation, the Delaware Court of Chancery enjoined a stockholder rights plan, having described it as having “an extreme, unprecedented collection of features.” Nevertheless, the opinion does not signal a major shift in Delaware law with respect to the adoption and maintenance of stockholder rights plans.…
Elimination of Statutory Barriers May Lead to New Wave of Public Benefit Corporations
Delaware Business Court Insider | February 24, 2021
On August 1, 2013, a new subchapter of the General Corporation Law of the State of Delaware (the “DGCL”) was added to enable Delaware for-profit corporations to be incorporated as or to become a Delaware public benefit corporation, or “PBC.” Rather than being operated solely to maximize value for stockholders, like traditional corporations, PBCs are required…
Delaware Laws & Programs Affecting Business – 2020 Edition
2020
Delaware Laws & Programs Affecting Business presents an introduction to Delaware and an overview of the laws and programs relating to doing business in the State. Our economy is diverse, and our legal framework is intentionally crafted to foster robust business activity. Our widely copied business laws lead the nation in clarity and predictability. Government…
Business Law Today | January 6, 2021
Recent events have spurred a social justice movement that has called for companies to commit to inclusion and diversity, specifically in the composition of their boards of directors.* In light of the foregoing, on December 1, 2020, Nasdaq filed a proposal with the U.S. Securities and Exchange Commission (“SEC”) that, if approved by the SEC, would condition…
Delaware Supreme Court on Costs in an Appraisal Proceeding
Insights | December 2020
In a recent decision, the Delaware Supreme Court held that an appraisal proceeding did not involve a violation of any law or rule and therefore did not constitute a “Securities Claim” giving rise to coverage for losses under the terms of a directors’ and officers’ insurance policy. It provided guidance regarding how the Delaware courts will…
Recent Developments Regarding ‘Wolf Pack’ Provisions in Rights Plans
Delaware Business Court Insider | November 11, 2020
A traditional stockholder rights plan remains one of the most effective tools a board of directors may use to protect the corporation’s stockholders from the threat of a hostile or abusive takeover. Rights plans often include specific provisions designed to address unique threats or issues facing the corporation. One such provision is an “acting in concert”—or…
Court of Chancery Permits $4.3 Billion Interim Distribution in Altaba Dissolution
Delaware Business Court Insider | November 4, 2020
In In re Altaba, the Delaware Court of Chancery, ruling at a preliminary stage of the dissolution process, authorized Altaba Inc. to make an interim liquidating distribution of up to $4.3 billion to its stockholders. Vice Chancellor J. Travis Laster’s opinion is noteworthy because it is one of the few opinions to authorize an interim distribution…
September 4, 2020
In In re Anthem-Cigna Merger Litigation, 2020 WL 5106556 (Del. Ch. Aug 31, 2020), the Delaware Court of Chancery found that neither Anthem, Inc. nor Cigna Corporation were entitled to recover damages in connection with the parties’ 2015 merger agreement (the “Merger Agreement”) providing for their proposed $54 billion merger (the “Merger”) that was terminated in…
Court of Chancery’s Post-‘Olenik‘ Interpretation of the ‘Ab Initio‘ Requirement
Delaware Business Court Insider | August 19, 2020
In Kahn v. M&F Worldwide, 88 A.3d 635 (Del. 2014), and its progeny, Delaware courts established that transactions subject to the entire fairness standard of review due to the presence of a conflicted controlling stockholder will nonetheless receive business judgment rule deference if the deal in question is conditioned ab initio on two well-known procedural…
Delaware Supreme Court Clarifies Standard for Liability for Disclosure Violations
Insights | August 2020
In Dohmen v. Goodman, the Delaware Supreme Court, in response to a certified question of law from the US Court of Appeals for the Ninth Circuit, provided significant guidance regarding the showing required for a plaintiff to seek compensatory damages for claims arising out of alleged disclosure violations. The Court distinguished between claims for a breach…
July 20, 2020
On July 16, 2020, the Governor of the State of Delaware signed House Bill 341, an act to amend the General Corporation Law of the State of Delaware (the “DGCL”). A link to our previously distributed summary of the 2020 amendments to the DGCL can be found here, and a link to the text of House Bill…
2020 Amendments to the General Corporation Law of the State of Delaware
Insights | July 2020
The 2020 amendments to the Delaware General Corporation Law make several important changes, including clarifying the circumstances under which emergency bylaws may be invoked, providing safe harbors for specified corporate actions taken during an emergency condition, reducing the statutory hurdles to become a public benefit corporation, providing further definition around mandatory indemnification for officers and effecting…
2020 Proposed Amendments to the General Corporation Law of the State of Delaware
June 16, 2020
House Bill 341, an act to amend the General Corporation Law of the State of Delaware (“DGCL”), has been introduced to the Delaware General Assembly. The amendments make several important changes to the DGCL, including clarifying the circumstances under which emergency bylaws may be invoked, providing safe harbors for specified corporate actions taken during the pendency…
Recent Developments in Rights Plans in Light of the COVID-19 Pandemic
Delaware Business Court Insider | April 29, 2020
The COVID-19 pandemic has caused significant worldwide disruptions of business operations and has negatively impacted stock prices globally. As a result, many corporations find themselves potentially vulnerable to abusive takeover tactics, such as inadequate or coercive takeover proposals and market accumulations by investors seeking to profit from depressed stock prices that may not accurately reflect a…
What Is Oversight? Del. Courts Continue to Provide Clarification Post-“Marchand”
Delaware Business Court Insider | December 11, 2019
Delaware courts have long described claims against a board of directors of a Delaware corporation for breach of its duty of oversight (Caremark claims) as involving the most difficult theories in corporate law upon which a plaintiff can prevail—requiring a plaintiff to demonstrate that the board “utterly failed” to adopt controls and systems for…
Advance Notice Bylaws: Who Will Suffer the Consequences of Stockholder Noncompliance?
Delaware Business Court Insider | September 18, 2019
In a recent decision, Bay Capital Finance v. Barnes and Noble Education, C.A. No. 2019-0539-KSJM (Del. Ch. Aug. 14, 2019) (transcript), the Delaware Court of Chancery interpreted and analyzed the effect of stockholder noncompliance with the express requirements of an advance notice bylaw. In its decision, the Court of Chancery closely scrutinized the particular facts and…