TheCorporateCounsel.net

If an officer exculpation charter amendment is on your agenda for this year’s annual meeting & you’ve got multiple classes of stock outstanding, I’ve got some good news for you.  Last year, the Delaware Chancery Court held that companies with this capital structure didn’t have to hold a separate class vote on these charter amendments, and earlier this week, in In re Fox Corp./SNAP Inc. Section 242 Litigation, (Del.; 1/24), the Delaware Supreme Court affirmed that decision. This excerpt summarizes the court’s decision:

We affirm the Court of Chancery’s judgment. Based on long-standing precedent, which the Class A Stockholders have not asked us to overrule, the powers, preferences, or special rights of class shares in Section 242(b)(2) refers to the powers, preferences, or special rights authorized for a class by Section 151(a) and expressed in the charter as required by Sections 102(a)(4) and 151(a).

The powers, preferences, or special rights of class shares expressed in the charter include default provisions in the DGCL, which are part of every charter under Section 394. The ability to sue directors or officers for duty of care violations is an attribute of the Companies’ stock, but not a power, preference, or special right of the Class A common stock under Section 242(b)(2).

– John Jenkins