In 2024, Delaware enacted extensive amendments to the Delaware General Corporation Law to overrule three recent opinions by the Delaware Court of Chancery. Many of these hurriedly written amendments attack the Court’s February 29, 2024 Activision opinion.

In Activision, the Delaware Court of Chancery held that the plaintiff, a former Activision stockholder, had stated a claim that Activision and its board of directors had not complied with the requirement of Delaware’s merger statute, 8 Del. C. § 251, which requires that the board approve an agreement of merger that contains specified items, such as the merger consideration and the terms of the certificate of incorporation of the surviving corporation.[1] Because a merger is such a fundamentally important transaction affecting the ownership of the corporation, Section 251 imposes mandatory steps for the protection of the stockholders.[2]

The Activision opinion was preliminary. There had been no discovery, trial, final decision or appeal. However, within days, rushed efforts began, not only to overturn the Court’s Section 251 analysis of a draft merger agreement, but also to drastically diminish the standards for other board approvals and actions. Unlike the careful process and consideration Delaware usually employs for DGCL amendments, the multiple statutory changes directed at Activision were hastily concocted. As a result, the Activision Amendments are overbroad, imprecise and undermine the Court of Chancery and the DGCL’s protection of stockholders.

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