e courts have interpreted when, pursuant to Section 242(b)(2), a class vote is required to amend a multi-class corporation's certificate of incorporation. See generally Elec. Workers Pension Fund, Local 103, I.B.E.W. v. Fox Corp., C.A. No. 2022-1007-JTL (Del. Ch. Mar. 29, 2023) (TRANSCRIPT) (granting defendants' motions for summary judgment), appeal docketed, In re Snap Inc. Section 242 Litig.,No. 120,2023 (Del.).This follow-up post takes a closer look at the specific language of the bench ruling, which (absent further guidance from the Delaware Supreme Court) might become a key guidepost for Delaware practitioners and savvy in-house counsel looking to evaluate whether a class vote was (or is) required by statute.The disputed charter amendments did not require a class voteTo recap, Section 242(b)(2) requires a separate class vote for any charter amendment that "would alter or change the powers, preferences, or special rights of the shares of such class so as to affect them adversely." 8 Del. C. § 242(b)(2). According to the plaintiffs in the Fox & Snap actions, the disputed amendments (which added officer exculpation provisions) triggered Section 242(b)(2) because they curtailed the stockholders' right to sue (by eliminating their ability to recover damages from officers for, inter alia, breaches of the fiduciary duty of care). After beginning with some "legal level-setting" (discussed below), the Court rejected this argument, reasoning that it was foreclosed by two relevant precedents: Hartford Accident & Indemnity Co. v. W.S. Dickey Clay Mfg. Co., 24 A.2d 315 (Del. 1942) (Dickey Clay) & Orban v. Field, 1993 Del. Ch. LEXIS 277 (Dec. 30, 1993) (Orban).Not all rights are created equalBefore grappling with the holdings and reasoning in Dickey Clay and Orban, Vice Chancellor Laster set the stage by delineating the different types of shareholder rights that Section 242(b)(2) might protect:Baseline rights:The rights that all stockholders possess, by default, as a matter of Delaware law. Thes

ox Corporation, 2022-1007-JTL (Del. Ch.) (Fox) & In re Snap Inc. Section 242 Litigation, 2022-1032-JTL (Del. Ch.) (Snap). By way of background, 8 Del. C. § 102(b)(7) (Section 102(b)(7)) was recently amended (effective as of August 1, 2022) to permit Delaware corporations to include provisions in their charter that exculpate officers from personal liability for monetary damages for, among other things, duty of care violations. Naturally, Delaware corporations (including Fox Corporation and Snap, Inc.) have responded by amending their charters to exculpate their officers from personal liability to the fullest extent permitted under the new and improved Section 102(b)(7).According to the stockholders in Fox and Snap, a class vote was required to validly approve the disputed amendments, because they had the effect of curtailing one of the three fundamental rights of stockholders—i.e., the right to sue. More specifically, the stockholders argued that the amendments fell within the scope of 8 Del. C. § 242(b)(2) (Section 242(b)(2)), which requires a class vote for any charter amendment that “would alter or change the powers, preferences, or special rights of the shares of such class so as to affect them adversely.”Although the stockholders’ arguments were faithful to the plain language of Section 242(b)(2), Vice Chancellor Laster explained that his decision to grant the defendants’ motions for summary judgment was controlled by two precedents: Hartford Accident & Indemnity Co. v. W.S. Dickey Clay Mfg. Co., 24 A.2d 315 (Del. 1942) (Dickey Clay) & Orban v. Field, 1993 Del. Ch. LEXIS 277 (Dec. 30, 1993) (Orban). According to the bench ruling, absent the “interpretive gloss” afforded by these precedents, the stockholders’ arguments would have been much stronger. Nevertheless, Vice Chancellor Laster explained—after detailing the holdings and reasoning in Dickey Clayand Orban—that Delaware courts have not interpreted Section 242(b)(2) as extending to any rights and powers not expressly set forth in

The Court held that the stock split failed to conform with the required corporate formalities, and, therefore, both the stock split and certain stock transfers purportedly effected by Wetzel, were invalid and void.The Court found that Wetzel failed to comply with the three steps that are required under 8 Del. C. § 242 for a corporation to amend its certificate of incorporation to split its outstanding shares. Citing to the Delaware Supreme Court’s decisions in STAAR Surgical Co. v. Waggoner, 558 A.2d 1130 (Del.1992) and Waggoner v. Laster, 581 A.2d 1127 (Del. 1990), the Court noted that Delaware law requires strict compliance with statutory requirements when a board purports to change the capital structure of a corporation and, therefore, refused to consider a number of equitable arguments advanced by the defendants.Under the first requirement of Section 242, a board must adopt a resolution setting forth the amendment proposed, declaring its advisability, and either calling a special meeting of stockholders or directing the amendment to be considered at the next annual meeting.

Although each amendment secured a majority of the votes cast, neither reached the threshold majority of those shares entitled to vote. Nevertheless, the board treated the amendments as adopted by filing them with the Delaware Secretary of State and implementing them.In their pre-suit demand, plaintiffs allegedly challenged the amendments under Delaware General Corporation Law Section 242(b), 8 Del. C. § 242(b), which requires the affirmative vote of “a majority of the outstanding stock entitled to vote thereon” to amend a certificate of incorporation. After plaintiffs filed suit against the Company and the board, including for the alleged violation of Section 242(b), the Company mooted the issue in large part by securing a majority vote of the shares to ratify the challenged amendments.

xistence to a specific period during which the SPAC seeks to effect an initial business combination. However, prior to the 2022 Amendments, the DGCL did not require a SPAC to file any document with the secretary of state of the State of Delaware confirming that its existence had ceased. Under new Section 275(f) of the DGCL, the SPAC must file a certificate of dissolution with the secretary of state within 90 days of the date on which the corporation’s existence ceased. However, a SPAC’s failure to file a certificate of dissolution does not operate to extend the corporation’s existence. 1US-Voting-Guidelines-2023-GL.pdf (glasslewis.com). https://www.issgovernance.com/file/policy/latest/americas/US-Voting-Guidelines.pdf2See, e.g., Dembrowski v. Snap, Inc., C.A. No. 2022-1042. (Del. Ch. Nov. 17, 2022); Karen Sbroglio v. Snap, Inc., C.A. No. 2022-1032 (Del. Ch. Nov. 16, 2022); Electrical Workers Pension Fund, Local 103, IBEW v. Fox Corp., C.A. No. 2022-1007 (Del. Ch. Nov. 4, 2022).3See 8 Del. C. § 242(b)(2).