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HLS Faculty & Senior Fellows
Program on Corporate Governance Advisory Board
- Peter Atkins
- David Bell
- Kerry E. Berchem
- Richard Brand
- Daniel Burch
- Paul Choi
- Jesse Cohn
- Arthur B. Crozier
- Renata J. Ferrari
- Andrew Freedman
- Ray Garcia
- Byron Georgiou
- Joseph Hall
- Jason M. Halper William P. Mills
- David Millstone
- Theodore Mirvis
- Philip Richter
- Elina Tetelbaum
- Sebastian Tiller
- Marc Trevino
- Steven J. Williams
The Delaware Law Series
Dropbox and the Evolving Governance Debate Over Corporate Domicile
Sarah Abrams is the Executive Vice President at The OakBridge Team and the Co-author of The D&O Diary.
The growing movement of public companies to reincorporate outside Delaware has transformed a policy debate into an increasingly significant source of corporate governance litigation. As companies have explored domiciles such as Nevada and Texas, Delaware has responded with legislative reforms, including Senate Bill 21 (“SB 21”), and judicial decisions that seek to clarify the standards governing these transactions.[1]
Against this backdrop, the recently amended complaint challenging Dropbox, Inc.’s reincorporation to Nevada raises important questions regarding the circumstances under which a reincorporation may be challenged as a breach of fiduciary duty.
The Sound of Silence
Mitu Gulati is the Warner-Booker Distinguished Professor of International Law at the University of Virginia School of Law, Stephen J. Choi is the Bernard Petrie Professor of Law and Business and Director of the Pollack Center at the New York University School of Law, and Molly Ball is a J.D. candidate at the University of Virginia School of Law. This post is based on their recent article.
In 2018, the Delaware Supreme Court dropped a footnote. In Eagle Force Holdings v. Campbell, Justice Valihura noted that the court had never actually decided whether a buyer who knows that some of the seller’s representations are false can still sue for breach after closing — the practice deal lawyers call “sandbagging.” Then-Chief Justice Strine, dissenting in part, confirmed, in his part of opinion, that Delaware had not yet decided the question.
Many M&A practitioners took the footnotes in Eagle Force as a signal that Delaware law was undecided on sandbagging. Because buyers rely on “pro-sandbagging” rules to protect their bargained-for representations and prevent sellers from opportunistically using the buyer’s due diligence as a shield against liability, the sudden ambiguity caused consternation among practitioners. Practitioners debated whether the signal from footnotes in Eagle Force meant that buyers needed to put in explicit pro sandbagging clauses in M&A contracts. Memos on this theme poured out, including from several prominent law firms including Ballard Spahr, Goodwin Procter, Mayer Brown, Paul Weiss, and Kramer Levin. The ABA ran CLE programming on it. A slide deck from a marquee panel of M&A lawyers at Northwestern’s Securities Regulation Institute put it bluntly: don’t assume silence is safe anymore — put an express pro-sandbagging clause in the contract.
The advice was nearly unanimous. And the market ignored it.
Legacies, Lessons and Launchpads: Charting Delaware’s Course in a New Era
Justice Karen Valihura is a Distinguished Professor of Corporate Law and Founding Director of the Corporate Law, Governance and Practice Institute, Farnan School of Law, at the Wilmington University. This post is based on her 2026 Weinberg Distinguished Lecture, and is part of the Delaware Law Series; links to other posts in the series are available here.
It is a great honor for me to be part of the Weinberg Distinguished Lecture series. Thank you for inviting me. My remarks today are solely my own and are not made on behalf of the Delaware Supreme Court or any other person.
As I near the end of my twelve-year term, I have been reflecting on the amazing privilege and honor I have had serving as a Justice on the Delaware Supreme Court. I am so grateful to all who have been part of my journey. In thinking about how to describe it, I was recently inspired by NASA’s stunningly successful Artemis II Mission. That Mission – lasting only 10 days – had a successful launch, lunar fly by and a safe splashdown off the coast of San Diego. One of the Artemis II’s astronauts’ description of their “group activity” could also be used to very accurately describe working as a member of our collegial, collaborative Delaware Supreme Court. They described their “group activity” in terms of functioning as one, embracing mutual accountability, being dutifully linked, and in terms of joy-filled contribution and profound, brother-sister like camaraderie, exemplifying that high-stakes success requires prioritizing human connection.[1] These sentiments describe precisely my experience over the past twelve years, and truly, I have been blessed to have been part of this collegial Supreme Court.
Bye Bye 80s: It’s Time to Revisit the Exchange Ban on Dual Class Companies Extending Sunsets
David J. Berger is a Partner at Wilson Sonsini Goodrich & Rosati; Daniel Gallagher is the Chief Legal, Compliance and Corporate Affairs Officer at Robinhood Markets; and Steven Davidoff Solomon is the Alexander F. and May T. Morrison Professor of Law at University of California, Berkeley School of Law. This post is part of the Controlling Shareholder Series; links to other posts in the series are available here.
The 80s called—they want their shoulder pads, synth-pop, moon-walks and, apparently, their blanket prohibition on midstream recapitalizations back. For more than three decades, a doctrinal relic from the leveraged-buyout fever of that era has quietly blocked shareholders from rearranging their capital structure midstream, even when those deals are demonstrably fair and value-maximizing. Though a relic, the exchange rule banning dual-class recapitalizations is still biting. Nasdaq has recently taken the position that the extension of a sunset on dual-class stock implicates (and possibly violates) the rule (while the NYSE has not commented publicly on Nasdaq’s position, its rule is largely identical to Nasdaq’s rule and presumably would be interpreted in the same way). The consequence is that this 80s by-gone now conceivably stands in the way of a host of dual-class companies seeking to extend sunset provisions to the benefit of their shareholders.
Back in the 1980s hostile takeovers were daily front-page news and corporate raiders like Carl Icahn, Victor Posner, and the Belzberg brothers struck terror into boardrooms. One particularly controversial defensive tactic was the “midstream recapitalization”: a controlling or incumbent block would propose a restructuring—often issuing high-vote or non-voting stock or exchanging existing shares on differential terms—that dramatically shifted voting power away from the public float and toward management or founders thereby defeating a hostile bid. In the most infamous cases (e.g., the 1987 Harcourt Brace Jovanovich recapitalization and the 1985 Multimedia recapitalization), minority holders faced a Hobson’s choice: tender into a coercive, hostile deal or be left holding highly illiquid, low-vote stubs.
Delaware Court of Chancery Issues First Decision Addressing Public Benefit Corporations
Amy Simmerman, Ryan Greecher, and James Griffin-Stanco are Partners at Wilson Sonsini Goodrich & Rosati. This post is based on a Wilson Sonsini memorandum by Ms. Simmerman, Mr. Greecher, Mr. Griffin-Stanco, Adrian Broderick, Jason Schoenberg, and Sarah Hand, all at WSGR, and is part of the Delaware Law Series; links to other posts in the series are available here.
On July 29, 2026, Vice Chancellor Nathan Cook of the Delaware Court of Chancery issued a decision addressing, for the first time, the fiduciary duties of directors of a public benefit corporation (PBC)—including in a sale of control.[1] Under the PBC form, the purpose of corporate decision-making is not merely to advance stockholder value—as is the ultimate purpose of decision-making for a traditional Delaware corporation—but instead to balance three sets of interests: a specific public benefit purpose chosen by the PBC, the best interests of those materially affected by the corporation’s conduct, and stockholders’ pecuniary interests.[2] Delaware law first authorized the PBC form in 2013, and since that time, the form has grown in prominence, with many significant public and private companies operating as PBCs. Until this decision, however, there had not yet been direct case law guidance addressing PBCs. The decision, accordingly, is noteworthy for PBCs and companies considering adopting the PBC form.
Are Hints Disclosures? Delaware Supreme Court Revives M&A Fraud Claim Despite Buyer’s Red Flags
Jonathan A. Dhanawade and Frank J. Favia Jr. are Partners and Andrew J. Stanger is Knowledge Counsel at Mayer Brown LLP. This post is based on their Mayer Brown memorandum and is part of the Delaware Law Series; links to other posts in the series are available here.
The Delaware Supreme Court’s recent opinion in Paragon Metals v. Smith[1] is a pointed reminder for M&A dealmakers: hints, partial disclosures, or due diligence “red flags” may not neutralize false contractual representations when the seller is actively concealing the truth. The case involved a CEO’s strategy to conceal damaging information about the target company while still attempting to avoid a fraud claim by providing enough hints about the situation to arguably put the buyer on inquiry notice about the issues. In reversing a trial court opinion, the Delaware Supreme Court held that the buyer could justifiably rely on the CEO’s representations despite imperfect due diligence because the CEO concealed critical customer-loss information and responded untruthfully when pressed. For M&A practitioners, the opinion sharpens several recurring issues, including when flawed due diligence becomes willful blindness, what standard of proof applies to Delaware fraud claims, how broadly a forward-looking “no material adverse effect” representation may reach, and what anti-reliance language can—and cannot—do.
The Delaware Supreme Court Issues a 3-2 Split Decision Allowing Post-Demand Evidence to Be Admissible in Section 220 Actions
Lauren Rosenello is a Counsel and Tanisha Brown is an Associate at Skadden, Arps, Slate, Meagher & Flom LLP. This post is based on their Skadden memorandum, and is part of the Delaware Law Series; links to other posts in the series are available here.
There have been several notable split decisions over the years in the Delaware Supreme Court, but it is a rara avis to see the justices split 3-2 over an issue involving access to books and records.
On March 25, 2026, a divided Delaware Supreme Court majority held that in exceptional circumstances, the Court of Chancery may consider post-demand evidence in the Section 220 context when analyzing whether a stockholder had a credible basis to suspect wrongdoing.
Justice Gary F. Traynor authored the majority’s opinion, ruling, among other things, that “nothing in [8 Del. C.] Section 220’s text prohibits the consideration of post-demand evidence,” and that a blanket prohibition could result in inefficiencies such as a repetitive process of updated demands and complaints.[1]
Chief Justice Collins J. Seitz, Jr. and Justice Karen L. Valihura dissented, arguing that, from a policy standpoint, a bright-line rule barring post-demand evidence would “discourage a premature race to the courthouse to attempt to gain a foothold for later merits-based litigation” and also would respect the intended summary nature of Section 220 proceedings.
New Day, New Rules: Five Key Aspects of Amended DGCL Section 144 and Section 220
Edward Micheletti and Jenness Parker are Partners and Lauren Rosenello is a Counsel at Skadden, Arps, Slate, Meagher & Flom LLP. This post is based on their Skadden memorandum and is part of the Delaware Law Series; links to other posts in the series are available here.
In spring 2025, there was significant debate over Delaware’s Senate Bill 21 (SB21), which offered new Delaware amendments addressing controller and board conflicts, as well as access to books and records. These amendments, codified in amended Section 144 and Section 220, were enacted to provide greater predictability but also to limit excessive litigation.
- Amended Section 144 established statutory safe harbors for conflicted transactions involving the board or controlling stockholders.
- Amended Section 220 was designed to curtail broad stockholder inspection rights.
In general, these provisions were heralded by the corporate bar as a stabilizing measure for corporate practitioners, offering greater clarity and certainty for books and records demands and transactions involving conflicts, and helping to avoid incessant and unnecessary litigation costs in every transaction.
Are AI Legal Chats by Non-Lawyer Officers and Directors Discoverable?
Gail Weinstein is a Senior Counsel, Philip Richter is a Partner and a Co-Head of the M&A and Private Equity Practice, 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 J. Steinman, Randi Lally, and Colum J. Weiden, and is part of the Delaware Law Series; links to other posts in the series are available here.
One might expect the response to be uncomplicated—say, that such conversations would not be protected from discovery, under either the attorney-client privilege or the attorney work product doctrine, because AI is not an attorney. But courts are just beginning to grapple with this question, and the answers have been varied:
- In U.S. v. Heppner (S.D.N.Y. Feb. 17, 2026), a federal district court in New York held that a criminal defendant’s exchanges with a consumer version of Claude, which were not directed by his lawyer, were discoverable.
- And, in Fortis Advisors v. Krafton (Del. Ct. Ch. Mar. 19, 2026), the Delaware Court of Chancery considered as evidence a CEO’s ChatGPT exchanges that provided a legal strategy for the company to avoid having to pay an earnout obligation.
- However, in Warner v. Gilbarco Inc. (E.D. Mich. Feb. 10, 2026), a federal district court in Michigan held that a pro se litigant’s use of AI was work product, and so was protected from discovery, because it was used in anticipation of litigation and in a manner not likely to get into an adversary’s hands.