Alignment Is Not Control: Court of Chancery Dismisses the KnowBe4 Challenge
In Le Clair v. KnowBe4, Inc., the Delaware Court of Chancery recently dismissed a putative class action brought by former stockholders who claimed that two institutional investors and KnowBe4’s CEO had joined forces as a control group, and that the directors who approved the deal breached their fiduciary duties. The Court of Chancery rejected the control-group theory outright and held that, even assuming the board was conflicted, a fully informed stockholder vote cleansed the transaction.
The decision illustrates the fact-specific showing that plaintiffs need in order to plead the existence of a control group, as well as to plead a disclosure deficiency sufficient to challenge a stockholder vote approving a transaction.
Delaware Supreme Court Upholds Section 144 Safe Harbor Amendments
On February 27, 2026, in a unanimous 37-page opinion, the Delaware Supreme Court upheld the constitutionality of significant changes to the Delaware General Corporation Law (DGCL) enacted in March 2025 via Senate Bill 21 (SB 21). This decision permits Delaware corporations and their advisers to confidently rely on these amendments for transactions with interested fiduciaries (including controlling stockholders), thereby increasing transaction planning flexibility and certainty while decreasing litigation risk under Delaware law.
Delaware Adopts Significant Changes to Its General Corporation Law
On March 25, 2025, Delaware Gov. Matt Meyer signed into law significant changes to the Delaware General Corporation Law. These amendments provide greater clarity in a number of important areas that had been the subject of common law development, and they underscore Delaware’s commitment to deferring to the decisions of informed and disinterested directors and stockholders. They also reflect the Delaware legislature’s ability to respond promptly to judicial and market developments, which is one of many reasons Delaware has been the incorporation destination of choice for many years. (more…)
It Took Seven Years But PE Firm Proves No Conflict In Sale Transaction
In 2022, the Defendants in Manti Holdings, LLC v. The Carlyle Group Inc. lost a battle—the Delaware Court of Chancery denied their motion to dismiss claims of breaches of fiduciary duties in connection with the 2017 sale of Authentix Acquisition Company, which had been majority-owned by affiliates of a private equity firm. Earlier this month, following a week-long trial, they won the war when the court ruled for them on the remaining claims in the case.
