Synopsis
Section 1. Section 1 of this Act amends § 122. New § 122(18) sets forth certain types of provisions that may be included in contracts between a corporation and its current or prospective stockholders or beneficial owners of its stock, even if those provisions are not set forth in, or referenced as a fact ascertainable in, the certificate of incorporation pursuant to § 141(a). The Court of Chancery recently observed that “[t]he expansive use of stockholder agreements suggests that greater statutory guidance may be beneficial[.]” West Palm Beach Firefighters’ Pension Fund v. Moelis & Company, 2024 WL 747180 (Del. Ch. Feb. 23, 2024) at n.272. Accordingly, new § 122(18) specifically authorizes a corporation to enter into contracts with one or more of its stockholders or beneficial owners of its stock, for such minimum consideration as approved by its board of directors, and provides a non-exclusive list of contract provisions by which a corporation may agree to: a. restrict or prohibit future corporate actions specified in the contract; b. require the approval or consent of one or more persons or bodies (including the board of directors or one or more current or future directors, stockholders or beneficial owners of stock) before the corporation may take actions specified in the contract; and c. covenant that the corporation or one or more persons or bodies (including the board of directors or one or more current or future directors, stockholders or beneficial owners of stock) will take, or refrain from taking, future actions specified in the contract. New § 122(18) also provides that the corporation may be subject to the remedies available under applicable contract law, including in connection with any breach or attempted breach of the contract. Notwithstanding any choice of law provision in the contract, the reference in the last sentence of § 122(18) to the law “governing” the contract shall be deemed to refer to the laws of this State if and to the extent choice of law principles (such as the internal affairs doctrine) so require. New § 122(18) provides bright-line authorization for contractual provisions addressing the matters listed above, and therefore would provide for a different rule than the portion of the Moelis decision in which the Court held that contract provisions of this nature must be included in the certificate of incorporation to be valid. The Court in Moelis found that provisions in a stockholder agreement that required a stockholder’s approval before the corporation could take a number of actions constituted, in the aggregate, impermissible internal governance restrictions in violation of § 141(a), and therefore those approval rights should have been included in the certificate of incorporation to be valid. New § 122(18) also includes a proviso confirming that no provision of a contract shall be enforceable against the corporation to the extent such contract provision is contrary to the certificate of incorporation or would be contrary to the laws of this State (other than § 115 of Title 8) if included in the certificate of incorporation. The proviso excludes § 115, so that corporations may enter into contracts under § 122(18) with exclusive forum and arbitration provisions that do not select the courts of this State to adjudicate claims under the contracts. New § 122(18) also provides that, for purposes of applying the proviso, a restriction, prohibition or covenant in any such contract that relates to any specified action shall not be deemed contrary to Title 8 or the certificate of incorporation by reason of a provision of Title 8 or the certificate of incorporation that authorizes or empowers the board of directors (or any one or more directors) to take such action. For example, a general recitation in the certificate of incorporation of the default provisions of § 141(a) would not be sufficient to render inoperable the provisions of § 122(18) because such recitation merely author