Following amendments in August 2022 to Section 102(b)(7) of the Delaware General Corporate Law (“DGCL”) to allow corporations to include provisions in their respective charters exculpating officers for breaches of the duty of care, a number of corporations naturally took steps to add such provisions.  Stockholder challenges followed in In re Fox Corp./Snap Section 242 Litigation, No. 120, 2023, 2024 WL 176575 (Del. Jan. 17, 2024), as revised (Jan. 25, 2024), which involved parallel lawsuits contesting the manner in which two separate corporations with multi-class capital structures adopted amendments providing for officer exculpation.  The Delaware Supreme Court ultimately affirmed a lower court decision in favor of the corporations, holding that, consistent with their respective charters, the corporations validly obtained approval from stockholder classes permitted to vote and validly excluded from the vote non-voting stockholder classes.

The post The Powers That Be: Supreme Court Holds That Non-Voting Stockholder Classes Cannot Invoke the “Powers, Preferences or Special Rights” Exception in Section 242, to Vote on Charter Amendments to Exculpate Officers From Duty of Care Breaches appeared first on Enhanced Scrutiny.