The Delaware General Corporation Law (DGCL) was amended in August 2024 to abrogate various earlier rulings by the Delaware Court of Chancery. These amendments specifically addressed decisions that many U.S. lawyers considered inconsistent with market practice, including the ruling in *West Palm Beach Firefighters' Pension Fund v. Moelis & Company*.
The amendments focused on shareholder agreement clauses that granted investors broad 'pre-approval' or 'veto' rights. The previous court decision had deemed these clauses invalid for substantially restricting the board of directors' ability to manage the corporation's business.
This legislative action provides greater clarity and predictability for corporations regarding the enforceability of shareholder agreements. The change aims to align statutory law with common market practices, which is a significant development for corporate governance in Delaware.
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