In late January 2026, the Delaware Supreme Court released a highly anticipated opinion in Moelis & Company v. West Palm Beach Firefighters’ Pension Fund, which rejected a minority stockholder’s challenge to a company’s stockholder agreement with its founding member. The decision is one more signal of a growing sentiment to return “back to the basics” of Delaware corporate law — a sentiment powerfully expressed by Vice Chancellor Lori Will just months before the Delaware Supreme Court’s ruling.
The backdrop of the Moelis decision is key to an appreciation of its holding. In September 2025, Will delivered the keynote address at the Journal of Corporation Law’s annual symposium — later published as Back to Basics: Delaware’s Genius of Simplicity — grounding her remarks in the foundational premise that stockholders that invest capital into a corporation engage in a “profound act of trust,” and Delaware courts exist not to supervise the resulting fiduciary obligations, but to enforce longstanding principles underlying them.
In her remarks, Will identified three areas of “creeping complexity” pulling Delaware from its foundational simplicity in recent years: (1) a diffusion of duties, as corporate boards are expected to handle wider and wider sets of interests, (2) the rise of subjective fact-intensive interrogations, and (3) expanded theories of liability that lead to erosion of predictability. It is against this backdrop that Moelis takes on its fuller significance.
Background
In 2014, Moelis entered into a stockholder agreement in connection with its initial public offering. The agreement required the company’s founder and CEO’s approval over a wide variety of corporate actions, including incurring debt above certain thresholds, entering into material contracts and amending governance documents. It also provided for certain rights related to the company’s board, such as the right to designate a majority of director nominees and assert influence over the board size.
In 2023, minority stockholders challenged the validity of several of these provisions, arguing in the Delaware Court of Chancery that they restricted board authority in violation of Delaware General Corporation Law (DGCL) Section 141(a), which provides that the “business and affairs” of a Delaware corporation are managed by or under the direction of its board of directors.
Court of Chancery Decisions and Legislative Response
In February 2024, Vice Chancellor Travis Laster issued two opinions ruling for the minority stockholders. In the first, Laster addressed the timeliness of the plaintiff’s complaint, concluding that the challenged provisions were void and therefore not subject to equitable defenses such as laches (an equitable defense barring claims brought after an unreasonable delay), and that laches was otherwise not applicable to “ongoing statutory violation[s]” occurring by way of a stockholder agreement. The second addressed the validity of the challenged provisions, with Laster holding that several provisions of the stockholder agreement were facially invalid under DGCL Section 141. The provisions included (1) pre-approval requirements forcing the board to obtain the founder’s consent for significant actions, such as incurring certain debts; (2) board composition requirements mandating that the board maintain a certain size and requiring the board to recommend that stockholders vote in favor of the founder’s designees; and (3) provisions requiring that a proportionate number of the founder’s designees be placed on board committees. Laster acknowledged that this holding would come at the expense of “new-wave” stockholder agreements and market practice generally but explained that “the General Assembly could enact a provision stating what stockholder agreements can do.”
The Delaware legislature did just that. In July 2024, it authorized the types of provisions found to be void in the Court of Chancery’s Moelis decision, though it specified that the new changes in the law would not apply to pending cases, including Moelis, which was on appeal to the Delaware Supreme Court. See DGCL § 122(18).
Delaware Supreme Court’s Moelis Decision
Notwithstanding the legislative response, the Delaware Supreme Court reversed the Court of Chancery’s ruling on timeliness and laches and vacated its ruling on the validity of the stockholder agreement provisions. Though the case was decided on procedural grounds, the Supreme Court nevertheless restored two foundational principles of Delaware corporate law. First, the Delaware Supreme Court held that the provisions at issue were voidable — rather than void — because the challenged provisions could have been implemented through a certificate of incorporation under DGCL Section 102(b) or other methods and were thus not beyond a corporation’s power. Void acts, by contrast, are those that are ultra vires, i.e., a corporation could never accomplish them.
Second, once the provisions were properly categorized as voidable, the court held that the doctrine of laches was available because any potential claim by the plaintiff related to the stockholder agreement accrued in 2014 — when the stockholder agreement was executed. In so doing, the Delaware Supreme Court rejected the Court of Chancery’s “continuing wrong” theory, which would have permitted a plaintiff to frame the agreement’s existence as a continued source of fresh accrual. Having established this, the court went on to hold that bringing the action nine years after accrual (clearly outside of the analogous three-year statute of limitations) was presumptively unreasonable, noting that there were no extraordinary circumstances or unusual conditions that would overcome that presumption.
Broader Institutional Correction
The legislative response to Moelis and the Delaware Supreme Court’s ruling highlight broader institutional corrections to the “creeping complexity” Will described in her remarks.
First, the General Assembly’s enactment of Section 122(18) signals a resistance to diffusion of duties. Rather than layering additional obligations on boards or expanding the law in response to these new “elaborate pressures,” it affirmed that corporations may allocate governance rights through private contract — the kind of structural simplicity Will advocated. Second, the Delaware Supreme Court’s laches holding restores and affirms the principle that an equitable claim must be brought promptly, rejecting any potential drifting by allowing expanded liability through an open-ended accrual theory.
While questions remain after the enactment of Section 122(18) and the Delaware Supreme Court’s Moelis ruling, these actions serve to clarify the proper scope of “void” or “voidable” inquiry and establish that a cause of action challenging the facial validity of stockholder agreements accrues when the agreement is executed, not on a rolling basis as the agreement operates over time. Delaware practitioners should pay close attention to the reasoning of the Moelis decision and the legislature’s recent action, as they signal a shift back to the approach espoused by Will.
McGuireWoods continues to monitor developments in Delaware corporate law. For questions, contact the authors or a member of the Securities & Shareholder Litigation Practice Area.