On February 27, 2026, the Delaware Supreme Court upheld recent amendments to the Delaware General Corporation Law (the DGCL) that provide safe harbor procedures for board decisions and corporate transactions involving director, officer, or controlling stockholder conflicts. The decision is a welcome development, and the statutory provisions at issue will continue to shape board decision-making and transaction planning for many companies and investors.
As we previously detailed,1 the statutory provisions at issue, set forth in Section 144 of the DGCL, were designed to address growing concerns in the market over recent Delaware case law and provide workable and responsible rules. Among other things, Section 144 brings clarity to when controlling stockholders exist under Delaware law; provides safe harbor procedures for cleansing board decisions and transactions that involve conflicts of interest for directors, officers, or controlling stockholders (e.g., requiring the use of either a board committee or a disinterested stockholder vote to cleanse most controlling stockholder conflicts); and provides a heightened presumption that independent public company directors are disinterested for Delaware law purposes. Section 144 provides that where its procedures are followed, the decision or transaction cannot be the subject of stockholder claims for equitable relief or monetary damages against directors, officers, or controlling stockholders.
In its decision, the Delaware Supreme Court rejected arguments by a stockholder—which sought to challenge a particular transaction subject to cleansing under Section 144—that the newly amended Section 144 violated the Delaware constitution by 1) divesting jurisdiction from the Delaware Court of Chancery over certain types of fiduciary duty claims and 2) applying retroactively to transactions, where they had not yet become the subject of litigation. In a 37-page opinion, the Court squarely rejected those challenges.
Alongside of new Section 144, Delaware had also adopted amendments to Section 220 of the DGCL governing stockholders’ rights to inspect corporate books and records—for example, board minutes to investigate potential wrongdoing. The amendments placed certain logical limitations and procedures on those rights. This case did not involve a challenge to those amendments, which remain intact as well.
The Delaware Supreme Court’s opinion is critical in protecting the steps that Delaware has taken to remain a competitive domicile for corporations. Over the last several months, many stockholder litigations over transactions implicating the new Delaware statute had been stayed or suspended pending the Delaware Supreme Court’s decision. Following this decision, we now expect to see cases interpreting Section 144, which will further contribute to the current dynamic corporate law environment.
For more information on this or any related matter, please contact any member of Wilson Sonsini's Corporate Governance or Corporate Governance Litigation practices.
[1] https://www.wsgr.com/en/insights/delaware-enacts-landmark-corporate-law-amendments.html.