West Palm Beach Firefighters’ Pension Fund v. Moelis & Co.: Chancery Court Invalidates Common Provisions Contained in a Stockholders’ Agreement
Winter 2024-2025
Publication| Transactional Committees| Corporate Transactions| Corporate Governance| Mergers & Acquisitions
In West Palm Beach Firefighters’ Pension Fund v. Moelis & Co., the Delaware Court of Chancery held that various provisions contained in a stockholder agreement, which were intended to give Ken Moelis, the founder and largest stockholder (the “Founder”) of Moelis & Co. (“Moelis”), control over Moelis following the company’s initial public offering (the “IPO”), were invalid under section 141(a) of the General Corporation Law of the State of Delaware (the “DGCL”). Under section 141(a) of the DGCL, the board of directors of a Delaware corporation, not stockholders or others, manages the business and affairs of the corporation unless the certificate of incorporation otherwise provides. Following the Moelis decision, the Delaware General Assembly enacted new section 122(18) of the DGCL to give corporate boards clear authority to enter into agreements with the corporation’s stockholders and beneficial owners that may contain the types of provisions that the Moelis court invalidated.