On January 20, 2026, in an opinion authored by Justice Gary F. Traynor, the Delaware Supreme Court reversed a decision by the Delaware Court of Chancery that had invalidated certain provisions in a stockholder agreement between a financial institution (the “Company”) and its founder and controlling stockholder.  Moelis & Co. v. West Palm Beach Firefighters Pension Fund, No. 340, 2024 (Del. Jan. 20, 2026).  The Court held that plaintiff’s facial challenge to the validity of the stockholder agreement was barred by the equitable doctrine of laches because plaintiff filed the lawsuit nine years after the parties entered into the agreement.

As discussed in our prior post, Vice Chancellor J. Travis Laster had issued a decision invalidating a number of provisions of the stockholder agreement, including a series of rights afforded to the controlling stockholder, finding that the stockholder agreement impermissibly delegated to the controller authority over governance activities that, under the Delaware General Corporation Law (“DGCL”), were exclusively reserved for the board.  In so holding, the Court of Chancery concluded that the challenged provisions violated DGCL Section 141(a) and were therefore void.  In a separate opinion, the Court of Chancery had also rejected defendants’ assertions that plaintiff’s challenge was time-barred, holding that equitable defenses are not available to defeat claims of statutory invalidity, and, in the alternative, that because plaintiff challenged an ongoing statutory violation, plaintiff’s claim continued to accrue so long as the agreement was in effect.  See W. Palm Beach Firefighters Pension Fund v. Moelis & Co., 2024 WL 550750 (Del. Ch. Feb. 12, 2024).

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