LITIGATION TRENDS 2025 | 107 T O C E M P E S G A N T I I P C A P R O W C S P O R T C O N T A C T I N T A P P P A T C C L S E C “DExit” or “DEliverance”: Delaware Fights to Maintain Its Corporate Law Dominance A number of Delaware corporate law decisions have garnered attention over the past year or so. Relatedly, there have been high-profile efforts by public companies to re-domicile from Delaware to other states, such as Nevada and Texas, which have been aggressively seeking to compete with Delaware in the market for incorporations (the so-called “DExit” movement). In an effort to ameliorate concerns and abate a perceived potential wave of companies seeking to reincorporate to other states, Delaware lawmakers have responded with a series of amendments to the Delaware General Corporation Law (the “DGCL”) in 2024, and further amendments in 2025. Recent Delaware Court Decisions The Market Practice Decisions. In late 2023 and early 2024, a series of decisions shook the foundations of common market practices that investors, corporations, and their advisors believed were established. First, in West Palm Beach Firefighters Pension Fund v. Moelis & Co., 311 A.3d 809 (Del. Ch. 2024), the Court of Chancery considered a challenge to a stockholder agreement that contained common provisions giving a founder certain governance and consent rights. The court held that many such provisions infringed on board authority, violating Section 141(a) of the DGCL, which embodies a foundational precept of Delaware corporate law that corporations are managed by or at the direction of their boards of directors (except as provided for in the certificate of incorporation). In Crispo v. Musk, 304 A.3d 567 (Del. Ch. 2023), the Court of Chancery stated that so-called “Con Ed” provisions in a merger agreement, frequently used to give a target the right to seek damages on behalf of stockholders in the event of a “busted deal” – including the market practice of defining a target’s damages to include a lost stockholder premium – were invalid. And in Sjunde Ap-Fonden v. Activision Blizzard, the Court raised questions over the validity of several common practices of target companies in a merger, including the board’s approval of a near-final merger agreement with S Securities Litigation Caroline Zalka Head New York caroline.zalka@weil.com 106 | Weil, Gotshal & Manges LLP
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