USA Law and Practice Contributed by: Kai Liekefett, Derek Zaba, Ram Sachs and Evan Grosch, Sidley Austin
bodies may include the board of directors or one or more current or future directors, stockholders or beneficial owners of stock of the corporation)”. Given the relatively recent passage of this amended language, its exact contours are not yet clear. How- ever, certain commentators have noted that the lan- guage of DGCL § 122 (18) appears unduly broad in the wider context of Delaware law, which has bal- anced contractual flexibility with mandatory corporate requirements, and introduces new uncertainty. This amendment follows the Delaware Court of Chan- cery’s decision in West Palm Beach Firefighters’ Pen - sion Fund v Moelis & Company , which struck down a stockholder agreement between Moelis & Company and its controlling stockholder. In Moelis , the court cited the DGCL 141 (a) mandate that the “business and affairs of every corporation... shall be managed by or under the direction of a board of directors”. The trial court held that certain of the contractual rights granted to the controller conflicted with Section 141 (a). The court recognised that its holding called into question certain elements of market practice, but reaffirmed that “a court must uphold the law, so the statute prevails”. In response to the trial court’s strict application of the statute, other parties in Delaware, including the Delaware Bar and the legislature, moved to pass the amendments of DGCL § 122 (18) to expressly permit stockholders’ agreements. The case is presently on appeal to the Delaware Supreme Court, which heard oral argument on the appeal in May 2025. 1.8 Typical Provisions in Shareholders’ Agreements/Joint Venture Agreements Shareholders’ agreements can include a wide vari- ety of terms based on the purpose and goals of the agreement. Such rights may include approval rights for corpo- rate actions, board and committee representation, standstill provisions, voting commitment provisions and commitments for the target to conduct a specific course of action such as a strategic review. These rights may also be conditioned upon action by the
shareholder, such as maintaining ownership thresh- olds. Shareholders’ agreements are typically enforceable and frequently disclosed in the company’s public fil- ings as material agreements. 2. Shareholders’ Meetings and Resolutions 2.1 Types of Meeting, Notice and Calling a Meeting Under Delaware law, a company is generally required to hold an annual meeting of stockholders, unless directors are elected by the written consent of stock- holders. As such, the vast majority of Delaware public companies hold an annual meeting of stockholders. If an annual meeting is not held for a period of 30 days after the date designated for the annual meeting in the by-laws, or if no date has been designated and no meeting has taken place in the prior 13 months, then, upon request of a stockholder or director, the Delaware Court of Chancery may order a meeting to be held. Stockholders, as of a specified record date, must be given notice of the annual meeting. The notice must include the date, time and place (including the means of remote communication, if any), and the record date for determining stockholders entitled to notice of the meeting. Notice must be given no more than 60 days and no less than ten days prior to the date of the annual meet- ing. The board of directors must set the record date to occur no more than 60 days and no less than ten days prior to the date of the annual meeting. A company’s governing documents may set forth additional require- ments for notice for a stockholder meeting. At the annual meeting, stockholders elect directors to the board of directors. Stockholders may vote on additional proposals, including the ratification of audi- tors and approval of executive compensation on an advisory basis. Stockholders may also vote on other proposals put forth by the board or stockholders, including the amendment of governing documents,
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