The Delaware Court of Chancery issued a ruling in the case of *West Palm Beach Firefighters' Pension Fund v. Moelis & Co*, which found certain provisions in Moelis & Company's stockholders' agreement to be invalid. These provisions imposed a pre-approval requirement from a shareholder for specific actions of the board of directors.
The court's decision determined that these clauses substantially restricted the board of directors' ability to manage the corporation's business. This ruling operated as a check on existing market practice, favoring the strict interpretation of the Delaware General Corporation Law (DGCL) at the time.
This legal development has implications for corporate governance, particularly concerning the balance of power between shareholders and the board. It highlights the importance of ensuring shareholder agreements align with statutory corporate law to avoid potential challenges.
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