Category Archives: Delaware Law Series

Delaware Chancery Dismisses KnowBe4 Take-Private Challenge

Posted by Jason Halper, Michael C. Holmes, and Sara Brauerman, Vinson & Elkins LLP, on

Thursday, July 9, 2026

Control group, delaware, Delaware Court of Chancery, Delaware law, Fiduciary duties, M&A Litigation, Private equity, Special committees
More from: Jason Halper, Michael Holmes, Sara Brauerman, Vinson & Elkins

Jason Halper is a Partner, Michael C. Holmes is Vice Chair, and Sara Brauerman is a Partner at Vinson & Elkins LLP. This post is based on a Vinson & Elkins memorandum by Mr. Halper, Mr. Holmes, Ms. Brauerman, Marisa Antonelli, and Anna Boos, and is part of the Delaware law series; links to other posts in the series are available here.

On May 27, 2026, Chancellor Kathaleen McCormick of the Delaware Court of Chancery issued a memorandum opinion in Le Clair v. KnowBe4, Inc., C.A. No. 2024-1143-KSJM, granting defendants’ motions to dismiss all claims arising from Vista Equity Partners’ $4.6 billion acquisition of KnowBe4, Inc. The decision is notable for its treatment of two key issues: (1) the standard for pleading the existence of a stockholder control group, and (2) the cleansing effect of an informed, uncoerced stockholder vote under Corwin v. KKR Financial Holdings LLC where entire fairness would otherwise apply due to director-level conflicts. 125 A.3d 304 (Del. 2015). The opinion reinforces the importance of robust procedural protections — including a fully empowered special committee and a majority-of-the-minority vote — in similar M&A transactions involving director-level conflicts.

Delaware’s First Read on the DGCL Section 144 Safe Harbor

Posted by Andre G. Bouchard, Michael Darby and Carmen X. Lu, Paul, Weiss, Rifkind, Wharton & Garrison LLP, on

Monday, July 6, 2026

Ayers v Foley, Conflicted Transactions, delaware, Delaware law, DGCL, DGCL s.122, DGCL S.144, Director compensation, Director Independence, Safe harbor
More from: Andre Bouchard, Cara Fay, Carmen Lu, Frances Mi, Laura Turano, Michael Darby, Paul Weiss

Andre G. Bouchard, Michael Darby, and Carmen X. Lu are Partners at Paul, Weiss, Rifkind, Wharton & Garrison LLP. This post is based on a Paul Weiss memorandum by Mr. Bouchard, Mr. Darby, Ms. Lu, Frances F. Mi, Laura C. Turano, and Cara Fay, and is part of the Delaware Law Series and the Controlling Shareholder Series; links to other posts in the Delaware Law Series are available here; links to other posts in the Controlling Shareholder Series are available here.

Recently in Ayers v. Foley, the Delaware Court of Chancery issued an opinion (by Vice Chancellor Will) interpreting for the first time certain provisions in the 2025 amendments to Section 144 of the Delaware General Corporation Law (“DGCL”), the landmark statutory reforms that provide safe harbor protections for certain conflicted transactions. The practical takeaway of Ayers is that Section 144 has raised the bar materially for rebutting the presumption of director independence at the pleading stage for publicly listed corporations when the board has determined that a director satisfies the exchange’s independence requirements because of the statute’s “substantial and particularized facts” pleading requirement. Significantly, the court reached this conclusion in the context of determining the issue of demand futility, reasoning that the heightened pleading standard in Section 144 is not confined to the safe harbors in Section 144 and was intended to apply broadly to other contexts as well. Ayers also reaffirms that when directors approve their own compensation, they are necessarily interested and their actions continue to be subject to entire fairness review.

Court of Chancery Imposes Sanctions for Spoliation of Signal Messages

Posted by Mallory Tosch Hoggatt, Alan Goudiss, Jeffrey Hoschander, A&O Shearman, on

Wednesday, July 1, 2026

deal disputes, delaware, Delaware law, Discovery, document retention, Fiduciary, Fiduciary duties, Litigation holds, M&A, Shareholder litigation
More from: Alan Goudiss, Henessy Guerrero, Jeffrey Hoschander, Jessie Donegan, Mallory Tosch Hoggatt, A&O Shearman

Mallory Tosch Hoggatt, Alan Goudiss, and Jeffrey Hoschander are Partners at A&O Shearman. This post is based on an A&O Shearman memorandum by Ms. Tosch Hoggatt, Mr. Goudiss, Mr. Hoschander, Henessy Guerrero, and Jessie Donegan, and is part of the Delaware law series; links to other posts in the series are available here.

On May 26, 2026, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery imposed sanctions for the spoliation of evidence in a fiduciary duty case arising from the merger of a wrestling entertainment company (the “Company”) with a global sports and entertainment company (the “Acquiror”). In re World Wrestling Ent., Inc. Merger Litig., C.A. No. 2023-1166-JTL (Del. Ch. May 26, 2026). The Court found that the Company’s controlling stockholder and senior officers—at a minimum, recklessly— destroyed Signal chats and messages after receiving legal hold notices and that plaintiffs were prejudiced thereby because “context suggests” that the lost evidence was relevant. As a result, the Court ordered a shift of the burden of proof from plaintiffs to defendants by presuming the truth of a limited set of facts in favor of plaintiffs, subject to rebuttal only by clear and convincing evidence.

First Court of Chancery Decision Interpreting New DGCL Amendments Provides Greater Certainty for Boards and M&A

Posted by Rick Horvath, Eric Siegel, and Molly Wang, Dechert LLP, on

Tuesday, June 30, 2026

delaware, Delaware law, DGCL, DGCL S.144, Director Independence, Fiduciary duties
More from: Eric Siegel, Molly Wang, Rick Horvath, Dechert

Rick Horvath and Eric Siegel are Partners, and Molly Wang is an Associate at Dechert LLP. This post is based on their Dechert memorandum and is part of the Delaware Law Series and the Controlling Shareholder Series; links to other posts in the Delaware Law Series are available here; links to other posts in the Controlling Shareholder Series are available here.

Key Takeaways

In 2025, sweeping amendments to the Delaware General Corporation Law (the “DGCL”) were adopted, including a new Section 144 safe harbor for conflicted transactions and a heightened presumption of director disinterestedness.
The Court of Chancery recently applied this presumption of director disinterestedness to a derivative complaint outside of the Section 144 safe harbor, and made clear that bare allegations of director compensation, overlapping board service, business relationships, and minority co-investments in professional sports teams will not suffice to rebut the presumption of director disinterestedness.
While addressed in the context of a derivative complaint, the Court’s analysis provides helpful guidance and, if applied in future cases, would remove much of the uncertainty related to conflicted transactions.

Delaware Court of Chancery Interprets New Section 144 and Applies Heightened Presumption of Director Independence

Posted by Amy Simmerman, Brad Sorrels, and Jordan Cramer, Wilson Sonsini Goodrich & Rosati, on

Sunday, June 28, 2026

Conflicted Transactions, Delaware Court of Chancery, Delaware law, Demand futility, derivative litigation, Director Independence
More from: Amy Simmerman, Brad Sorrels, Daniyal Iqbal, Jordan Cramer, Shannon German, Wilson Sonsini Goodrich & Rosati

Amy Simmerman and Brad Sorrels are Partners and Jordan Cramer is an Associate at Wilson Sonsini Goodrich & Rosati. This post is based on a Wilson Sonsini memorandum by Ms. Simmerman, Mr. Sorrels, Ms. Cramer, Daniyal Iqbal, and Shannon German, and is part of the Delaware Law Series and the Controlling Shareholder Series; links to other posts in the Delaware Law Series are available here; links to other posts in the Controlling Shareholder Series are available here.

On June 15, 2026, the Delaware Court of Chancery issued an Opinion interpreting Section 144 of the Delaware General Corporation Law (the DGCL), the landmark statutory measure adopted last year to provide safe harbors for certain conflicted transactions and address director independence, among other reforms.[1] The Opinion arose in a common context in Delaware stockholder litigation: claims over director and management compensation. In the decision, Vice Chancellor Lori W. Will applied, for the first time, the statute’s heightened presumption of independence for directors of public companies determined by the board to be independent under the relevant NYSE or Nasdaq listing standards to dismiss derivative claims on demand futility grounds.

Chancery Finds Funds Liable for Aiding Directors’ Fiduciary Breaches

Posted by Gail Weinstein, Philip Richter, and Steven Epstein, Fried, Frank, Harris, Shriver & Jacobson LLP, on

Wednesday, June 17, 2026

Aiding and Abetting Liability, Conflicts of interest, delaware, Delaware Chancery Court, Delaware law, fiduciary duty, Preferred Stock Financings, Private equity
More from: Gail Weinstein, Hannah Reiner, Maxwell Yim, Philip Richter, Steven Epstein, Steven Steinman, Fried Frank

Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Steven Steinman, Maxwell Yim, and Hannah Reiner; and is part of the Delaware law series; links to other posts in the series are available here.

In Guilbeau v. Footprint (May 11, 2026), the Court of Chancery held, at the pleading stage of litigation, that it was reasonable to infer that certain directors of Footprint International Holdco, Inc., a non-controlled Delaware corporation (the “Company”), breached their fiduciary duties when they approved a Company financing (the “Financing”) that was proposed, and largely funded, by three institutional investors (the “Funds”) that were among the Company’s largest stockholders. The court also held that the Funds may have aided and abetted the directors’ breaches, acting through their designees on the Company’s board.

The Financing raised $500 million ($450 million of it from the Funds) through the issuance of a new class of preferred stock (the “Class F Stock”), at a time the Company was verging on insolvency. The Financing was recommended by a three-member special committee of independent directors (the “Committee”) and approved by the full ten-person board of directors (the “Board”) (which included one designee from each of the three Funds—collectively, the “Fund Designees). As would be typical in connection with this type of financing, the Company provided special benefits to the Funds and to two large stockholders (“ZenCap” and “Koch”) who had blocking rights.

Lessons from ExxonMobil

Posted by Katherine Terrell Frank, Robert L. Kimball, and Meredith Jeanes Lyons, Vinson & Elkins LLP, on

Wednesday, June 10, 2026

Delaware law, Proxy advisors, Public Companies, reincorporation, Shareholder activism, Texas Business Law
More from: Katherine Terrell Frank, Meredith Jeanes Lyons, Robert L. Kimball, Vinson & Elkins

Katherine Terrell Frank and Meredith Jeanes Lyons are Partners and Robert L. Kimball is a Senior Partner at Vinson & Elkins LLP.

After 144 years of legal domicile in New Jersey, ExxonMobil Corporation, which has been physically headquartered in Texas since 1989, is consolidating its legal and physical homes to Texas. With approximately 71 percent of votes cast in favor at its 2026 annual meeting, Exxon’s reincorporation to Texas reflects the Lone Star State’s growing competitiveness as a corporate law jurisdiction and demonstrates that reincorporation into Texas may be an achievable result for widely-held public companies. Exxon Chairman and Chief Executive Officer Darren Woods explained that Texas has cultivated a policy and regulatory environment that enables companies to focus on creating shareholder value rather than navigating unnecessary red tape and political interference.[1]

Boards considering reincorporation into Texas should carefully consider the corporate governance and shareholder outreach strategies employed by Exxon and other successfully redomiciled public companies. Because proxy advisors have generally opposed reincorporation to Texas, favorable votes for reincorporation are not guaranteed for corporations that lack a controlling shareholder or a large, friendly voting block. Successful reincorporations will require companies to work well in advance of shareholder meetings to solicit investor feedback, determine an acceptable Texas corporate governance structure, and educate voters on the benefits of reincorporation.

Chancery Holds Specific Oral Statements About Post-Closing Plans May Exceed Mere Puffery

Posted by Gail Weinstein, Philip Richter, and Steven Epstein, Fried, Frank, Harris, Shriver & Jacobson LLP, on

Saturday, June 6, 2026

Contract Litigation, Deal Negotiations, delaware, Delaware Chancery Court, Earnout Disputes, Fraudulent Inducement, Mergers & acquisitions
More from: Colum Weiden, Gail Weinstein, Maxwell Yim, Philip Richter, Randi Lally, Steven Epstein, Fried Frank

Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Randi Lally, Maxwell Yim, and Colum Weiden, and is part of the Delaware law series; links to other posts in the series are available here.

In Shareholder Representative Services LLC v. Sphera Solutions, Inc. (Mar. 31, 2026), a Magistrate for the Court of Chancery, in a letter decision, at the pleading stage of the litigation, declined to dismiss the plaintiff’s fraud claims that were based on oral statements that Sphera Solutions, Inc. allegedly made during the negotiations leading up to its acquisition of SupplyShift, Inc. Sphera allegedly told SupplyShift that, post-closing, it would focus on and provide resources for cross-selling SupplyShift’s products to Sphera’s customers. The plaintiff claimed that SupplyShift had relied on those statements in deciding to sell to Sphera and agreeing to a significant earnout; that, after closing, Sphera did not fulfill those “oral promises” and thus the earnout threshold was not met; and that, at the time the promises were made, Sphera had already finalized a post-closing budget (the “Budget”) that reflected that it had had no intention of fulfilling the promises. Critically, the Merger Agreement did not contain an anti-reliance provision.

Chancery Rules Stockholder, through its Board Designee, May Have Conspired with Company Fiduciaries to Commit Fraud

Posted by Gail Weinstein, Philip Richter, and Steven Epstein, Fried, Frank, Harris, Shriver & Jacobson LLP, on

Tuesday, May 26, 2026

CFO, delaware, Delaware Court of Chancery, Diem v. Maisonette, fiduciary duty, fraud, Stockholder
More from: Gail Weinstein, Maxwell Yim, Philip Richter, Randi Lally, Steven Epstein, Steven Steinman, Fried Frank

Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Steven Steinman, Randi Lally, and Maxwell Yim, and is part of the Delaware law series; links to other posts in the series are available here.

In Diem-II, LLC and Diem-III, LLC v. Maisonette (Mar. 4, 2026), the Delaware Court of Chancery, at the pleading stage of litigation, rejected dismissal of the plaintiffs’ claims that they had been fraudulently induced to invest in the Series C and D financing rounds of Maisonette Inc. (the “Company”). The Company had provided the plaintiffs with unaudited financial statements and, after the plaintiffs invested, they learned that, while they were conducting due diligence, the Company had restated its financial statements. The restatement reflected lower earnings-based results than were reflected in the financial statements that had been provided to the plaintiffs. The plaintiffs claimed that the Company, its directors, its CFO, and the private equity fund that was its largest stockholder (the “Stockholder”), in order to induce the plaintiffs to invest, had intentionally provided financial statements that they knew were “not entirely accurate.”

Delaware Supreme Court Affirms Dismissal of Premature Challenges to Advance Notice Bylaws

Posted by Scott Barnard, Stephanie Lindemuth, and Doug Rappaport, Akin Gump Strauss Hauer & Feld LLP, on

Thursday, May 21, 2026

Advance notice bylaws, delaware, Delaware Corporate Law, Delaware Supreme Court, Proxy contests, Shareholder activism, Stockholder Litigation
More from: Doug Rappaport, Kate Shapiro, Lindsey Prutsman, M. Scott Barnard, Shiri Huber, Stephanie Lindemuth, Akin Gump

Scott Barnard, Stephanie Lindemuth, and Doug Rappaport are Partners at Akin Gump Strauss Hauer & Feld LLP. This post is based on an Akin Gump memorandum by Mr. Barnard, Ms. Lindemuth, Mr. Rappaport, Kate D. Shapiro, Lindsey Prutsman, and Shiri Huber, and is part of the Delaware law series; links to other posts in the series are available here.

Key Takeaways

On April 29, the Delaware Supreme Court affirmed dismissal of stockholder suits challenging advance notice bylaws adopted by The AES Corporation and Owens Corning, holding the stockholders’ claims were brought too soon and were therefore unripe.
The Court reiterated that advance notice bylaws are “twice‑tested,” first for legal authorization, then by equity, but emphasized that equitable review requires a ripe controversy.
The Court did not announce a categorical rule that a rejected nomination is always required to challenge bylaws; it held only that these claims, including the hypothetical deterrence effect on board nominations, were too abstract to support declaratory or injunctive relief.

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Category Archives: Delaware Law Series

Delaware Chancery Dismisses KnowBe4 Take-Private Challenge

Delaware’s First Read on the DGCL Section 144 Safe Harbor

Court of Chancery Imposes Sanctions for Spoliation of Signal Messages

First Court of Chancery Decision Interpreting New DGCL Amendments Provides Greater Certainty for Boards and M&A

Key Takeaways

Delaware Court of Chancery Interprets New Section 144 and Applies Heightened Presumption of Director Independence

Chancery Finds Funds Liable for Aiding Directors’ Fiduciary Breaches

Lessons from ExxonMobil

Chancery Holds Specific Oral Statements About Post-Closing Plans May Exceed Mere Puffery

Chancery Rules Stockholder, through its Board Designee, May Have Conspired with Company Fiduciaries to Commit Fraud

Delaware Supreme Court Affirms Dismissal of Premature Challenges to Advance Notice Bylaws

Key Takeaways

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