Delaware Court of Chancery’s Chilly Response to Activision Blizzard Casts Doubt on Common M&A Practices

On February 29, 2024, the Delaware Court of Chancery issued an opinion in Sjunde AP-Fonden v. Activision Blizzard questioning a number of common practices for target companies in a merger, including the process for obtaining board approval of a merger agreement and the contents of the notice of the stockholders’ meeting to approve the merger agreement, and allowing a challenge to the validity of the subject merger to proceed.  It is an important read for all involved in M&A and will undoubtedly have an impact on market practice.

(more…)

A Reminder of Board Primacy: Delaware Court of Chancery Invalidates Stockholder Agreement Provisions Encroaching on Board-Level Decisions

On February 23, 2024, the Delaware Court of Chancery issued an opinion in West Palm Beach Firefighters’ Pension Fund v. Moelis & Co. invalidating certain stockholder agreement provisions that gave a significant stockholder broad pre-approval rights over corporate actions. The opinion serves as a reminder of the contours of board authority under DGCL Section 141(a) and how contractual agreements may “improperly constrain a board’s authority.” It remains to be seen if the decision will be appealed, but at present, it should be evaluated by parties considering contractual provisions that may directly or indirectly limit director decision-making.

(more…)

“A Bad Bull”: Chancery Court Rejects Plaintiffs’ Fee Application in Oracle Derivative Litigation

Plaintiffs’ bid for a US$5 million mootness fee in In re Oracle Corp. Derivative Litigation, C.A. No. 2017-0337-SG was denied by Vice Chancellor Glasscock, who noted that “not even great counsel can wring significant stockholder value from litigation over an essentially loyal and careful sales process.”

(more…)

“Bad Things Can Happen to Corporations” – But Officers Cannot Be Liable Absent Bad Faith

In Segway, Inc. v. Cai, the Delaware Court of Chancery dismissed one of the increasingly common breach of fiduciary duty cases brought against corporate officers after last year’s seminal McDonald’s decision, which clarified that officers owe a duty of oversight just as directors do. No doubt reassuringly for those officers, Vice Chancellor Will corrected the “misimpression that an oversight claim pursued against an officer is easier to plead than one against a director.” The opinion definitively confirms that “bad faith remains a necessary predicate to any Caremark claim.”

(more…)

SEC Adopts Final Rules Regarding Special Purpose Acquisition Companies and De-SPAC Transactions

On January 24, 2024, the U.S. Securities and Exchange Commission (SEC) adopted final rules relating to special purpose acquisition companies (SPACs) and de-SPAC transactions. While the final rules substantially track the rules originally proposed in March 2022, the SEC elected not to adopt two provisions that had received significant attention and changed market behavior. The final rules also modified the SEC’s guidance and requirements for the inclusion of projections in all SEC filings by both SPAC and non-SPAC issuers.

(more…)

Protecting Its “Unwaivable Right to a Jury Trial,” California Waves Goodbye to a Delaware Forum Selection Clause

I. Overview of Enforceability of Forum Selection Clauses

The Delaware Court of Chancery has promoted the use of forum selection clauses in corporate charters since its 2010 opinion In re Revlon Inc. Shareholders Litigation. Three years later, in Boilermakers v. Chevron, the Delaware Court of Chancery ruled that forum selection clauses in corporate bylaws are facially valid for types of shareholder litigation, including derivative claims, fiduciary claims, statutory claims under the Delaware General Corporation Law, and claims regarding internal affairs. In light of these decisions, Delaware forum selection clauses contained in corporate charters or bylaws of the type found facially valid in Boilermakers have been enforced by state courts in many states. But a recent decision from a California appellate court suggests that some California courts may be resistant to such provisions based on California public policy in favor of the right to a jury trial.

(more…)

New Year’s Surprise: Portions of Cloudy Day Advance Notice Bylaw Amendments Called into Question

The Delaware Court of Chancery rang in the new year with a decision calling into question certain provisions in a company’s advance notice bylaws, which had been adopted in the face of an upcoming proxy fight.  On the whole, the Kellner v. AIM Immunotech Inc. decision is yet another reminder of the critical importance of advance notice bylaws and that they are often enforced by Delaware courts.  But companies should work with counsel to consider the impact of this decision on their own bylaws, bearing in mind that considerations may change based on the outcome of a now-pending appeal in Kellner.

(more…)

Categories

Archives

Meet the Team

<a target=‘_blank’ href="https://www.sidley.com/en/people/s/stern-andrew-w">Andrew W. Stern</a>

Andrew W. Stern

New York
<a target=‘_blank’ href="https://www.sidley.com/en/people/n/newell-charlotte-k">Charlotte K. Newell</a>

Charlotte K. Newell

New York
<a target=‘_blank’ href="https://www.sidley.com/en/people/a/austin-elizabeth-y">Elizabeth Y. Austin</a>

Elizabeth Y. Austin

Chicago
<a target=‘_blank’ href="https://www.sidley.com/en/people/b/bartlett-jaime-a">Jaime A. Bartlett</a>

Jaime A. Bartlett

San Francisco
<a target=‘_blank’ href="https://www.sidley.com/en/people/d/ducayet-james-w">Jim Ducayet</a>

Jim Ducayet

Chicago
<a target=‘_blank’ href="https://www.sidley.com/en/people/g/garcia-yolanda-c">Yolanda C. Garcia</a>

Yolanda C. Garcia

Dallas
<a target=‘_blank’ href="https://www.sidley.com/en/people/h/heyworth-james">James Heyworth</a>

James Heyworth

New York
<a target=‘_blank’ href="https://www.sidley.com/en/people/k/kaplan-alex-j">Alex J. Kaplan</a>

Alex J. Kaplan

New York
<a target=‘_blank’ href="https://www.sidley.com/en/people/l/lopez-jodi-e">Jodi E. Lopez</a>

Jodi E. Lopez

Los Angeles
<a target=‘_blank’ href="https://www.sidley.com/en/people/m/muenz-jon">Jon Muenz</a>

Jon Muenz

New York

<a target=‘_blank’ href="https://www.sidley.com/en/people/r/ross-ian-m">Ian M. Ross</a>

Ian M. Ross

Miami
<a target=‘_blank’ href="https://www.sidley.com/en/people/s/sheppard-hille-r">Hille R. Sheppard</a>

Hille R. Sheppard

Chicago
<a target=‘_blank’ href="https://www.sidley.com/en/people/s/sultanian-heather">Heather Benzmiller Sultanian</a>

Heather Benzmiller Sultanian

Chicago
<a target=‘_blank’ href="https://www.sidley.com/en/people/v/velevis-robert-s">Robert S. Velevis</a>

Robert S. Velevis

Dallas
<a target=‘_blank’ href="https://www.sidley.com/en/people/w/wechkin-robin-e">Robin E. Wechkin</a>

Robin E. Wechkin

Seattle

SUBSCRIBE

To receive email alerts when we post a blog entry, please provide your name and email address.