The Delaware Court of Chancery recently provided a powerful reminder of the Court’s equitable purpose, and how it will not countenance bad faith or duplicity. In Ghatty v. Mudili et. al., three board members of a five-member board voted at a special board meeting to remove the remaining two directors from their officer positions, and later sued under 8 Del. C. § 225 to seek confirmation that the two directors had been validly removed from their officer roles. The Defendants challenged their removal on a number of grounds. The Court of Chancery considered one argument dispositive: that the meeting notice was inherently deficient because the meeting agenda omitted the removal action effectuated at the meeting, and indeed misleadingly suggested that one Defendant’s officer role would be expanded. The Court condemned the notice as “duplicity,” voided the vote, and held that the Defendants remained officers of the Company.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2025/05/MN-24015-Enhanced-Scrutiny-Blog-Imagery-Refresh_4.jpg606833Hille R. Sheppardhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngHille R. Sheppard2026-01-15 09:03:312026-01-14 14:15:39Chancery to Directors: Don’t Play Dirty
Throughout 2025, Enhanced Scrutiny provided insightful analysis of notable M&A and corporate governance developments from the Delaware courts and other jurisdictions. Below, we highlight some of the most popular posts from the past year. We look forward to continuing our coverage in 2026.
This past spring, the California Court of Appeal affirmed the enforceability of federal forum provisions (“FFPs”) in corporate charters. Bullock v. Rivian Auto., Inc., No. G063033, 2025 WL 1177303 (Cal. Ct. App. Apr. 23, 2025). FFPs, which require stockholders to bring claims for violations of the Securities Act of 1933 (the “‘33 Act”) in federal court instead of state court, were deemed facially valid in Delaware in Salzberg v. Sciabacucchi, 227 A.3d 102 (Del. 2020). Underscoring the importance of the forum for suits based on securities offerings, the plaintiffs in Bullock sought review of the California court’s decision. On August 13, 2025, the Supreme Court of California declined the plaintiffs’ petition for review. Petition for review & publication request(s) denied, Bullock v. Rivian Auto., Inc., No. S290922 (Cal. Aug. 13, 2025). The plaintiffs have now indicated an intent to seek certiorari from the United States Supreme Court. See Application to Extend the Time to File a Petition for a Writ of Certiorari, Bullock v. Rivian Auto., Inc., No. 25A506 (U.S. filed Oct. 31, 2025), application granted (Nov. 4, 2025).
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2024/11/MN-24015-Enhanced-Scrutiny-Blog-Imagery-Refresh_2.jpg606833Sara B. Brodyhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngSara B. Brody2025-12-17 09:03:332025-12-16 16:09:57California Appellate Court Affirms Enforceability of Federal Forum Provisions in Securities Act Litigation
On August 25, 2025, the Delaware Court of Chancery in Carroll v. Burstein dismissed a stockholder’s facial challenge to the advance notice bylaw of Stoke Therapeutics, Inc. (Stoke). An advance notice bylaw requires a stockholder to provide a company advance notice of its intention to nominate a director candidate or submit a proposal for approval by stockholders. The decision adds to the growing body of caselaw governing advance notice bylaws in the wake of Kellner v. AIM ImmunoTech Inc., 320 A.3d 239 (Del. 2024) (Kellner II), which held that a bylaw is facially invalid only if it cannot operate lawfully under any circumstance. In addition, Carroll offers an important reminder to companies of the need for careful bylaw drafting to promote clarity and foster sound corporate governance.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Jodi E. Lopezhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJodi E. Lopez2025-12-10 09:04:172025-12-08 17:22:59Court of Chancery Reaffirms High Bar for Challenging Advance Notice Bylaws, but Emphasizes the Importance of Clear Drafting
In a recent Caremark decision, the Delaware Court of Chancery largely denied a motion to dismiss, holding that most of Regions Bank’s board purportedly ignored red flags raised in a whistleblower report concerning the bank’s unlawful overdraft practices — practices that later led to the company paying $191 million in penalties and remediation to the Consumer Financial Protection Bureau (CFPB). The court found a former in‑house lawyer’s draft complaint sent to the board was a true red flag, and it held that merely engaging outside counsel to investigate, without timely corrective action, does not automatically defeat an inference of bad faith at the pleadings stage. The opinion underscores that both documented, prompt board‑level escalation and timely corrective action are critical as to compliance risks that are central to the business.
Can a person steal property located in Delaware, and yet a Delaware court lack personal jurisdiction over the thief? For tangible assets like real property or money held in a Delaware bank, the answer would plainly be “no.” But, as the Court of Chancery recently held in a matter of first impression, the analysis changes when the property is cryptocurrency. In Timoria LLC v. Chaib Anis, et al., C.A. No. 2025-0883-JTL (Del. Ch. Oct. 6, 2025), Vice Chancellor Laster considered whether the Court could exercise in rem or quasi in rem jurisdiction over a cryptocurrency (Ether) held by foreign defendants — and concluded that although the digital assets were technically “located” in Delaware, that fact alone was not enough to satisfy due process.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Robert S. Velevishttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngRobert S. Velevis2025-11-17 09:02:102025-11-14 16:13:02Delaware Can’t Hold the Keys: Court of Chancery Limits Back-Door Personal Jurisdiction in Crypto Theft Case
In September, the Delaware Court of Chancery dismissed a lawsuit by minority shareholder United Atlantic Ventures, LLC (“UAV”) against Trump Media and Technology Group Corp. (“TMTG”), the operator of social media platform Truth Social, and several other individual Defendants, including President Donald Trump, Devin Nunes, Donald Trump Jr., and Kash Patel. In the 55-page opinion, Vice Chancellor Will found that the Court of Chancery need not decide whether the case should be stayed based on presidential immunity, because all of the claims were incompatible with Delaware law, insufficiently pled “conspiracy theories,” or better suited for Florida state court.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2024/10/MN-24015-Enhanced-Scrutiny-Blog-Imagery-Refresh_11.jpg606833James Heyworthhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJames Heyworth2025-11-13 10:55:412025-11-13 10:56:00Delaware Court of Chancery Finds No “Truth” to Minority Shareholder’s Allegations of a Lock-Up Conspiracy by Truth Social Operator, But Does Not Reach Presidential Immunity
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Chancery to Directors: Don’t Play Dirty
The Delaware Court of Chancery recently provided a powerful reminder of the Court’s equitable purpose, and how it will not countenance bad faith or duplicity. In Ghatty v. Mudili et. al., three board members of a five-member board voted at a special board meeting to remove the remaining two directors from their officer positions, and later sued under 8 Del. C. § 225 to seek confirmation that the two directors had been validly removed from their officer roles. The Defendants challenged their removal on a number of grounds. The Court of Chancery considered one argument dispositive: that the meeting notice was inherently deficient because the meeting agenda omitted the removal action effectuated at the meeting, and indeed misleadingly suggested that one Defendant’s officer role would be expanded. The Court condemned the notice as “duplicity,” voided the vote, and held that the Defendants remained officers of the Company.
(more…)
Hille R. Sheppard
Chicago
hsheppard@sidley.com
Natalie A. Piazza
Dallas
npiazza@sidley.com
Top Posts of 2025
Throughout 2025, Enhanced Scrutiny provided insightful analysis of notable M&A and corporate governance developments from the Delaware courts and other jurisdictions. Below, we highlight some of the most popular posts from the past year. We look forward to continuing our coverage in 2026.
(more…)
Enhanced Scrutiny Contributors
delawarelit@sidley.com
California Appellate Court Affirms Enforceability of Federal Forum Provisions in Securities Act Litigation
This past spring, the California Court of Appeal affirmed the enforceability of federal forum provisions (“FFPs”) in corporate charters. Bullock v. Rivian Auto., Inc., No. G063033, 2025 WL 1177303 (Cal. Ct. App. Apr. 23, 2025). FFPs, which require stockholders to bring claims for violations of the Securities Act of 1933 (the “‘33 Act”) in federal court instead of state court, were deemed facially valid in Delaware in Salzberg v. Sciabacucchi, 227 A.3d 102 (Del. 2020). Underscoring the importance of the forum for suits based on securities offerings, the plaintiffs in Bullock sought review of the California court’s decision. On August 13, 2025, the Supreme Court of California declined the plaintiffs’ petition for review. Petition for review & publication request(s) denied, Bullock v. Rivian Auto., Inc., No. S290922 (Cal. Aug. 13, 2025). The plaintiffs have now indicated an intent to seek certiorari from the United States Supreme Court. See Application to Extend the Time to File a Petition for a Writ of Certiorari, Bullock v. Rivian Auto., Inc., No. 25A506 (U.S. filed Oct. 31, 2025), application granted (Nov. 4, 2025).
(more…)
Sara B. Brody
San Francisco, Palo Alto
sbrody@sidley.com
Madison J. Ferraro
San Francisco
madison.ferraro@sidley.com
Court of Chancery Reaffirms High Bar for Challenging Advance Notice Bylaws, but Emphasizes the Importance of Clear Drafting
On August 25, 2025, the Delaware Court of Chancery in Carroll v. Burstein dismissed a stockholder’s facial challenge to the advance notice bylaw of Stoke Therapeutics, Inc. (Stoke). An advance notice bylaw requires a stockholder to provide a company advance notice of its intention to nominate a director candidate or submit a proposal for approval by stockholders. The decision adds to the growing body of caselaw governing advance notice bylaws in the wake of Kellner v. AIM ImmunoTech Inc., 320 A.3d 239 (Del. 2024) (Kellner II), which held that a bylaw is facially invalid only if it cannot operate lawfully under any circumstance. In addition, Carroll offers an important reminder to companies of the need for careful bylaw drafting to promote clarity and foster sound corporate governance.
(more…)
Jodi E. Lopez
Los Angeles
jlopez@sidley.com
Deborah Sands
New York
dsands@sidley.com
When a Whistleblower Complaint Becomes a Board-Level “Red Flag”
In a recent Caremark decision, the Delaware Court of Chancery largely denied a motion to dismiss, holding that most of Regions Bank’s board purportedly ignored red flags raised in a whistleblower report concerning the bank’s unlawful overdraft practices — practices that later led to the company paying $191 million in penalties and remediation to the Consumer Financial Protection Bureau (CFPB). The court found a former in‑house lawyer’s draft complaint sent to the board was a true red flag, and it held that merely engaging outside counsel to investigate, without timely corrective action, does not automatically defeat an inference of bad faith at the pleadings stage. The opinion underscores that both documented, prompt board‑level escalation and timely corrective action are critical as to compliance risks that are central to the business.
(more…)
Jim Ducayet
Chicago
jducayet@sidley.com
Barret V. Armbruster
Dallas
barmbruster@sidley.com
Delaware Can’t Hold the Keys: Court of Chancery Limits Back-Door Personal Jurisdiction in Crypto Theft Case
Can a person steal property located in Delaware, and yet a Delaware court lack personal jurisdiction over the thief? For tangible assets like real property or money held in a Delaware bank, the answer would plainly be “no.” But, as the Court of Chancery recently held in a matter of first impression, the analysis changes when the property is cryptocurrency. In Timoria LLC v. Chaib Anis, et al., C.A. No. 2025-0883-JTL (Del. Ch. Oct. 6, 2025), Vice Chancellor Laster considered whether the Court could exercise in rem or quasi in rem jurisdiction over a cryptocurrency (Ether) held by foreign defendants — and concluded that although the digital assets were technically “located” in Delaware, that fact alone was not enough to satisfy due process.
(more…)
Robert S. Velevis
Dallas
rvelevis@sidley.com
Delaware Court of Chancery Finds No “Truth” to Minority Shareholder’s Allegations of a Lock-Up Conspiracy by Truth Social Operator, But Does Not Reach Presidential Immunity
In September, the Delaware Court of Chancery dismissed a lawsuit by minority shareholder United Atlantic Ventures, LLC (“UAV”) against Trump Media and Technology Group Corp. (“TMTG”), the operator of social media platform Truth Social, and several other individual Defendants, including President Donald Trump, Devin Nunes, Donald Trump Jr., and Kash Patel. In the 55-page opinion, Vice Chancellor Will found that the Court of Chancery need not decide whether the case should be stayed based on presidential immunity, because all of the claims were incompatible with Delaware law, insufficiently pled “conspiracy theories,” or better suited for Florida state court.
(more…)
James Heyworth
New York
jheyworth@sidley.com
Matthew Henry
San Francisco
mhenry@sidley.com
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