I personally will collect the bets on which firm will be the first to argue that, because it only reports semi-annually, its stock price cannot be presumed to be efficient and therefore it cannot be the target of a fraud on the market Section 10(b) class action.

Headline quote from the SEC proposal:

The proposed amendments, however, could also lead to efficiency reductions. As discussed above, a switch to semiannual (or hybrid) reporting would likely increase information asymmetries, thereby reducing the informational efficiency of share prices and reducing stock market liquidity for the companies that move away from quarterly reporting.

Also worth noting, to determine if a market is efficient, courts look to whether the company qualifies for S-3 filing – but the SEC proposes to make that a lot easier, too.

Direct/derivative.  I’ve previously blogged about how the direct/derivative distinction comes out when blockholders increase their position into hard control via nontraditional means, such as stock buybacks, open market purchases, and stock giveaways.

The latest in the genre is the complaint filed in ZipRecruiter. The company went public with a dual class share structure, but no single insider had hard control; control was distributed among several officers and VC backers (which meant, I take it, the company was not “controlled” for NYSE purposes).   Over time, most of the insiders sold down their positions, which left one VC backer with hard control, and the founder with a substantial voting block.  After that, the Board caused the company to institute a share buyback program, run by the founder/CEO, and that buyback program included a lot of negotiated purchases from the VC backer, as well as on the open market.  Which meant, ultimately, the founder was left with hard control.

The plaintiff alleges that the board violated its fiduciary duties by enabling this transfer of control to the founder, without requiring a control premium.  And, the plaintiff is bringing the claims directly rather than derivatively.

As you can see from my prior posts on this (as well as my article, The Three Faces of Control) I am very sympathetic to the idea that this complaint is properly brought directly.  Substantively, well, we only have the complaint but you can already see the headache it creates.  Sure shareholders who bought in understood the risk of Class B holders selling and creating a hard control situation; on the other hand, the buybacks were the Board’s decision, and seem to have facilitated the transfer of control to the founder specifically. But one might argue over whether control was transferred from the public to the founder, or from the VC backer to the founder.

Bylaws vs Contracts.  Last week, Mike Levin and I talked about the Supreme Court’s FS Credit Opportunities v. Saba Capital Master Fund case on our podcast, and in particular how I objected to everyone’s easy assumption that bylaws are contracts.  (This, of course, is a longstanding concern of mine.)  Anyhoo, a podcast listener helpfully alerted me to the recent Second Circuit decision in Petersen Energía Inversora S.A.U. v. Argentine Republic, where the court rejected claims by shareholders of an Argentinian oil and gas company, in part on the ground that bylaws – though they may be interpreted like contracts – are not, in fact, actual contracts.  Though the court was addressing Argentinian law, it made several references to U.S. law at the same time.

Reiterating my modest proposal about proposals.  Way back in 2018, I argued that the SEC should require that when companies report the results of a shareholder vote, they break out the votes of high vote shares/insiders and report them separately from the votes of public shareholders, so that investors can get a clear sense of the extent which a particular proposal was essentially imposed or rejected by insiders.  Sure, you might be able to do the math and get a general sense of the likely breakdown, but it’s not easy to do and the headline totals may therefore be somewhat misleading.  At the time, I was inspired in part because I’d just seen news reports of a vote at Google requesting a collapse of the dual class share structure.  The news gave the headline vote totals but did not make clear that the proposal only failed because of the votes of Larry Page and Sergey Brin.

Since then, I learned that the Council of Institutional Investors has made this kind of reporting part of its good governance priorities, and such a proposal was recently offered at Facebook/Meta.  The board recommended shareholders vote against it, because, they argued, shareholders can always do their own math, and the shareholders voted it down. However, as Andrew Droste pointed out on his blog, if you in fact do the math, it appears that 64% of the non-insiders favored the proposal, so the outside shareholders themselves, at least, don’t seem think that the math is all that easy.

Anyhoo, I mention all of this because here’s an article by Bloomberg reporting the shareholder vote at Dell to reincorporate out of Delaware and into Texas.  As you can see, the article announces that the vote was 97% in favor, but leaves out the part where public shareholders only have 9% of the votes at Dell.

So, I once again renew my proposal: Companies should be required to break out the high vote/insider shares from everyone else’s. 

An additional benefit, apart from the transparency, is that it might actually cause minority shareholders to take the vote more seriously. Right now, it’s possible they either don’t vote, or vote with management, because they know it doesn’t matter (at least when the vote doesn’t have a cleansing effect on something).  But if they know that their votes are separately reported, they may wish to make their voices heard.

Update: Andrew Droste does the math and concludes that the Dell redomestication was rejected by the unaffiliated shareholders; it was the insider votes that forced it through.

And another thing.  New Shareholder Primacy podcast is up!  Me and Mike Levin talk about private ordering in corporate law.  Here at Apple; here at Spotify; and here at YouTube.  Also, programming note: Mike and I aren’t taking the summer off completely from podcasting, but we’ll be on a kind of intermittent schedule for the next little while, and get back to regular podcasting in August.

Delaware’s Division of Corporations released its Annual Report recently for 2025. As expected, Delaware’s overall number of business entities continues to grow, with “a more than fifteen percent increase over 2024” in terms of entity formations.

But one thing about this year’s report popped out at me because it differed from years past. Delaware reported that its percentage of the IPO market in 2025 came in at “Nearly 70% U.S. IPOs.” It provided that information in this graphic.

This is consistent with Houlihan Lokey data that had Delaware at 61.8% for U.S. Non-SPAC IPOs last year. I assume Delaware counts SPACs toward its total.

But this is also a notable change from how it presented this information the year before. In 2024, Delaware reported that “81.4 percent of U.S. based Initial Public Offerings in 2024 chose Delaware as their corporate home.” It also expanded on this statistic, stating that:

This is why Delaware is home to more than 2.1 million active business entities. Eighty one percent of companies that launched an initial public offering on a U.S. stock exchange chose Delaware as their state of incorporation in 2024, an increase from 2023. That such an overwhelming proportion of newly public companies chose Delaware as their jurisdiction of choice underscores the premium the public markets continue to place on Delaware’s approach to corporate law and governance, where clarity, predictability, balance and unrivaled customer service are long-standing hallmarks.

If the 2024 percentage was something that “underscore[d] the premium the public markets continue to place on Delaware’s approach to corporate law and governance,” what does the shift from 81.4% to “nearly 70%” mean?

This takes some math to work out. Delaware’s decision to depart from last year’s clear figure to instead announce “nearly 70%” obscures the true percentage. Delaware’s market share, by its calculation, likely stands somewhere between 65% and 69.9%. This is a bit speculative because Delaware didn’t give the actual number, but it’s defensible to round up to 70% in that range so we’re looking at a likely 11.5% to 16.4% drop from the year before for where the actual number is. How signifiant is that?

Professor Bainbridge ran the numbers on past IPO data in his DExit Driver paper. He used past reports to break out Delaware’s percentage of the IPO market from 2012 to 2022. This is the table he created:

The decision to shift away from a clear number will make it harder to do this in the future, but Professor Bainbridge took these numbers and calculated that over that 11 year period, the mean was 86.6% of IPOs for Delaware with a median of 89 and a standard deviation of 4.7.

To put the rough 65% to 70% range in perspective, splitting the difference for a 67.5% share of the IPO market is over four standard deviations from the mean. Statistically, this puts it at a roughly 1 in 40,000 event if we assume a normal distribution.

Notably, 2025 had a significant number of IPOs–347 according to the SEC. That’s a decent sample.

If you extend Professor Bainbridge’s data set to include 2023 (80%) and 2024 (81.4%), the picture gets a bit better for Delaware with the mean shifting to 85.72, the median to 86, and the standard deviation to 4.86. A 67.5% share of the IPO market then comes to about 3.75 standard deviations from the mean, or roughly a one in 9,000 event for a normal distribution.

As Delaware hasn’t told us what the actual figure is, this table shows the distance from the mean and rough probabilities for whatever the true figure is from 65-69%. (Disclosure — I had Claude prepare the table)

I’m hoping to pull together 2026 IPO statistics by state soon, but Delaware’s “nearly 70%” figure shows a remarkable downturn in Delaware’s market share for IPOs.

Of course, none of this means that Delaware isn’t going to continue to grow or that the trend will necessarily continue in future years, but it does provide a strong data point that many companies made different decisions in 2025 than in past years. If this continues, other jurisdictions may accumulate enough public companies to build broader corporate law ecosystems and turn into more stable competitors.

Notably, Delaware has also taken to comparing itself to other jurisdictions and is directing people to the Council of Institutional Investors’ comparison chart. I shared some notes on that chart here.

As I mentioned in an earlier post, Nevada is launching a pilot program to consolidate business court cases before judges dedicated to adjudicating business court cases. This is the Administrative Order creating the pilot program.

The pilot offers a chance to generate data for the next legislative session and to see how many judges will be necessary to carry Nevada’s caseload. This reorganization functionally creates a dedicated business court by dedicating two judges to handle business court matters exclusively. (Fully shifting to an appointed and dedicated system will require a constitutional amendment to pass the next legislative session and a public referendum.)

The Order provides than to “pilot a new Business Court model, Judge Maria Gall (Dept. 9), and Judge Joe Hardy (Dept. 15), will be designated full Business Court Judges.”

Business Court cases assigned to most other judicial Departments “shall be evenly and randomly reassigned to Departments 9 and 15.” The Business Court Cases currently with Department 13, Judge Denton, will remain with Department 13. The non-Business Court cases that were being handled by Departments 9 and 15 are also being reassigned. The changes will exclusively dedicate Judges Gall and Hardy to Business Court matters.

Consolidating Business Court cases before judges dedicated to handling Business Court Matter should substantially improve the pace of adjudication. I previously discussed adjudication times under the prior system. In 2024, the average time to adjudication for a business court case was 1,228 days. Part of the challenge has been that judges handling multiple dockets must continually rotate between Business Court and other civil and criminal matters. For example, a court might pause stockholder litigation to meet a Speedy Trial Act deadline for someone accused of shoplifting from a 7-11. This pilot program will show whether two dedicated judges can efficiently manage the vast majority of the Business Court caseload.

Exactly how many Business Court judges Nevada needs will be easier to determine when judges exclusively handle business court matters. Other jurisdictions with larger populations run business courts with just a few capable judges. For example, Miami’s Complex Business Litigation Division has two judges. The Miami area has about 6 million people. The Vegas Valley has roughly 2.5 million people and Nevada’s overall population now stands at about 3.2 million.

Although this should be good for business court adjudication times, I expect reduced docket fragmentation may also improve adjudication times for other disputes. By allowing three other judges to completely shed Business Court matters, the reorganization frees them to reallocate that time to other dockets.

Research on multitasking tends to show that it’s hard to switch between different tasks and it generally slows people down. Some research shows that “shifting between tasks can cost as much as 40 percent of someone’s productive time.”

We have what I think is our first decision interpreting the new DGCL 144: Ayers v. Foley, from VC Will.

This is a derivative action challenging a board’s award of compensation to itself, and an award of compensation to the company’s founder and Chair.  What is particularly amusing is that the company, Fidelity National Financial, is now organized in Nevada; its reincorporation became effective one day after the lawsuit was filed.  What is also amusing is that FNF’s first attempt to reincorporate to Nevada failed a shareholder vote; the company was only able to win shareholder approval by committing in its charter to adopting greater shareholder protections than Nevada provides. 

So, the case.  With respect to the award to the board, the defendants conceded that this was an interested transaction, with no cleansing mechanisms, and demand was excused; the only argument they made was that plaintiffs’ complaint did not make it “reasonably conceivable” that the compensation was not entirely fair.  That argument was a heavy lift, and VC Will rejected it; those claims will proceed.

The real action concerned the grant to the company founder and chair.  He held only 3.6% of the stock; there was no argument he was a controlling shareholder. 

So the issue for the court was whether demand was excused under Rule 23.1. Which meant, VC Will had to decide whether a majority of the board was disinterested and independent under the standard set forth in United Food & Commercial Workers Union & Participating Food Industry Employers Tri-State Pension Fund v. Zuckerberg.

But, nine out of eleven board members had been identified as independent under NYSE listing rules.  And under new DGCL 144(d)(2):

Any director of a corporation that has a class of stock listed on a national securities exchange shall be presumed to be a disinterested director with respect to an act or transaction to which such director is not a party if the board of directors shall have determined that such director satisfies the applicable criteria for determining director independence from the corporation … which presumption shall be heightened and may only be rebutted by substantial and particularized facts that such director has a material interest in such act or transaction or has a material relationship with a person with a material interest in such act or transaction.

So the question for VC Will was, does this provision extend to demand excusal, or is it solely limited to cleansing interested transactions, which is the subject of DGCL 144?

She concluded that it does extend to demand excusal:

Where the General Assembly intended a provision to apply only within Section 144, it said so expressly.  In Section 144(d) itself, the legislature took care to confine a provision to specific paragraphs—and did so within paragraph (d)(7), where it named three other paragraphs to which the rule applies.  Similarly, the preface to Section 144(e) states that its definitions are “[f]or purposes of this section.”  Section 144(d)(2) contains no such limiting language.

If “provisions are expressly included in one part of a statute, but omitted from another, it is reasonable to conclude that the legislature was aware of the omission and intended it.”  The purposeful omission of limiting language in paragraph (d)(2) illustrates the legislature’s intent that the heightened presumption apply broadly, including when assessing director disinterestedness for purposes of Rule 23.1.  Reading paragraph (d)(2) to apply solely within Section 144 would also deprive the limiting language in paragraph (d)(7) and subsection (e) of independent meaning, contrary to settled principles of statutory construction.

Although Rule 23.1 already requires particularized facts to rebut the presumption of independence and disinterestedness, Section 144(d)(2) goes further by requiring both “substantial and particularized facts.” The inclusion of the additional modifier suggests a legislative intent to strengthen the presumption beyond the Rule 23.1 standard.

In other words, VC Will read the legislature’s intent for DGCL 144(d)(2) to be incorporated into demand excusal, because nothing in DGCL 144(d)(2) says its definition of disinterestedness is to be confined solely to that particular section of the Code.  Other provisions of DGCL 144, such as DGCL 144(e), are so confined. From there, VC Will went on to find demand was not excused with respect to the founder compensation.

Fine.

But later in the opinion….

The statute requires “substantial and particularized facts” demonstrating either “a material interest” in a transaction or “a material relationship” with an interested person…. See also id. § 144(e)(7), (8) (defining “[m]aterial interest” and “[m]aterial relationship”).

Um. Didn’t we just agree that DGCL 144(e) is limited to DGCL 144?  That’s what distinguishes it from DGCL 144(d)?  But DGCL 144(e) ended up getting imported into Rule 23.1 via DGCL 144(d) nonetheless, which suggests the inquiry can’t be as simple as trying to divide the pieces of DGCL 144 into those that apply to “this section” and those that apply more broadly.

Look, this is a difficult problem.  On the one hand, DGCL 144 does not in any way incorporate or reference Rule 23.1  It even uses different terminology than the caselaw developed under Rule 23.1: Rule 23.1 caselaw distinguishes between “independence” and “disinterestedness,” and while DGCL 144 clearly includes both concepts substantively, it combines them under a single rubric, “disinterest” (which makes it difficult to teach, by the way).  That might be a reason to treat the two as wholly separate.

On the other hand, from a judicial perspective, it is uncomfortable to have a definition of independence for cleansing purposes that is distinct from the definition of independence for the purposes of demand excusal, each of which is subject to a distinct particularity standard.

It is even more uncomfortable when you consider that demand excusal is, as a practical matter, an inquiry into whether a particular type of decision was cleansed – the decision whether to bring a lawsuit.  That is, most potentially “interested” board decisions involve actual contracts – to buy something, to sell something, to grant compensation.  In the demand context, it’s a different type of potentially interested board decision – the decision whether to sue.  Either way, though, we’re talking about what is sufficient to cleanse that decision such that the court will defer to it. Viewed that way, there is no reason the cleansing procedures for the two – actual transactions/contracts, versus decisions whether to bring a lawsuit – should differ at all.

But if that’s the logic, then we have to ask whether the full suite of new DGCL 144 cleansing procedures applies to demand excusal.  And that would create real upheaval.  For example, DGCL 144 permits cleansing of transactions where the board is majority-conflicted via the use of a committee.  But in the context of demand excusal, if the board is majority-conflicted, the use of a special litigation committee is subject to special scrutiny by the court.  Not to mention, of course, DGCL 144 has a whole new set of rules for the construction of such a committee.

I don’t know the right answer for any of this.  But I think with respect to the narrow question before VC Will – how to evaluate independence – the path of least resistance might have been to say that DGCL 144(d)(2) simply incorporates the particularity standards already employed by Delaware courts under Rule 23.1. Granted, the “substantial” modifier of DGCL 144(d)(2) is new, but I don’t think the 23.1 caselaw finds a lack of independence based on insubstantial facts.  And interpreting DGCL 144(d)(2) through Rule 23.1’s lens causes the least disruption, because there’s no need to invent a whole new standard.  Rule 23.1 demand excusal does not change; what changes is how allegations of lack of independence are evaluated in cases not governed by Rule 23.1, and that will be done by reference to existing caselaw.  I take no position, though, on whether that would have made a difference in this particular case.

And another thing. New Shareholder Primacy podcast is up!  Me and Mike Levin talk about the Supreme Court’s decision in FS Credit Opportunities v. Saba Capital Master Fund. Here at Spotify; here at Apple; and here at YouTube.

We’re past the bulk of proxy announcements and waiting on votes to come in at this point. I expect we’ll continue to see some action this year, but I don’t expect the pace to be as rapid.

For context, I looked back at roughly around this time last year. At that point, I was only tracking movement to Nevada and had 17 announcements. By the end of the year, it was up to 28 announcements of some kind or another for Nevada. I had 8 for Texas. That came to roughly 36 overall for Texas and Nevada.

This list has not changed substantially from last week, but we’re at 29 announcements between Texas and Nevada for this year already. On this update, we only have a few more now since the last list about two weeks ago. It’s two more that I didn’t have on my list: Granite Ridge and DeFi Development Corp. This is the updated sheet for folks that want to see the full set.

Scope Note

A quick note on the numbers after a reader question came in. This list has a few entries from firms that announced in 2025 but didn’t finalize until 2026 (Forian, Cheetah, Galecto, & Haymaker). If you wanted to adjust for announcements that happened in 2026 only, you’d pull them out.

Graphics

As before, I asked Claude to help generate graphics to make the data easy to understand at a glance.

Origin & Destination

Count v. Market Cap

Here, ExxonMobil and Dell were big moves.

Stated Delaware Franchise Tax Amounts

The franchise tax figure is something I’m curious about for microcap and under market segment. It’s not going to be a material thing for large corporate filers, but it’s worth keeping an eye on on for that market segment.

Final Notes

Ultimately, not much has changed in the last few weeks. Unless the pace picks back up, I’m likely to switch to putting this out about once a month. In the interim, I’ll get the the rest of the fields in the spreadsheet updated and filled in and see if we can glean any other insights from that data. If you think of any other fields that would be helpful to add, please send them through. For example, I’m going to add a field tracking where the company is headquartered.

I may also put together an estimated franchise tax number for corporations that announced moves from Delaware without disclosing the figure.

Everyone’s talking about the possibility SpaceX will acquire Tesla, presumably in a stock merger, likely using the nonvoting shares SpaceX has authorized but unissued in its charter.

If that happens, the question is – who wins, SpaceX shareholders, or Tesla shareholders, or will the price be perfection itself?

If you assume that Elon Musk’s personal interests will play a role here, then part of the pricing will have something to do with his relative financial stake in each company, which I am in no way going to try to calculate (also, I suppose he might have tax considerations, again, not going to calculate). But legally, there are very good reasons why the price would favor Tesla shareholders.

First, Elon Musk’s pay package at Tesla awards him around 35 million shares when he hits certain market cap milestones, coupled with operational milestones. But if Tesla is acquired, the operational milestones disappear, and the merger price becomes the market cap. Which means, if Tesla is acquired for a nominal price of $2 trillion, he gets an additional 35 million Tesla shares (which, in a stock for stock merger with SpaceX, convert to SpaceX shares). If Tesla is acquired for 2.5 trillion, that’s 70 million shares, and so forth. So he has good reason to want to hit those numbers if Tesla is acquired.

Second, if SpaceX issues stock to buy Tesla, even if doing so requires a SpaceX shareholder vote (which would be under NASDAQ rules, and it’s likely but I’m not sure), Musk controls the votes – he can be sure of SpaceX-side approval. But he doesn’t control the votes at Tesla. He needs to persuade Tesla shareholders, especially if they get no-vote shares, so that suggests a Tesla-favorable price.

Third, assuming Texas law tracks Delaware on this, if SpaceX acquires Tesla, that’s a conflict transaction of the sort shareholders on both sides might sue over (when Shari Redstone caused CBS to combine with Viacom, both sets of shareholders sued, for example). But on the SpaceX side, that’s a derivative lawsuit; shareholders must have 3% to file, and that’s, you know, in excess of $52 billion depending on where SpaceX closes today. But on the Tesla side, it’s not derivative – that’s direct, and that means, there is no 3% barrier to suing. Plus, Tesla has not (yet) attempted to bar class actions the way SpaceX has. So there’s much more litigation risk on the Tesla side, even if the standard of proof would require plaintiff-shareholders to show fraud or intentional misconduct.

Which means, my tentative bet is that the cheapest way to get exposure to SpaceX at this time may be to buy Tesla, and wait for the merger.

Somehow, this keeps happening.

A company goes public with a dual class share structure – 10 votes per share for insiders, 1 vote per share for the public, something like that. 

But the company pays its employees in stock, so it issues more 1-vote shares.  Then maybe the company wants to make stock acquisitions – and it issues still more 1-vote shares.  The insiders want to monetize some of their stock, so they convert their 10-vote shares to 1-vote shares and sell them.

Eventually, there is a risk that the insiders’ 10-vote shares will no longer represent a majority.

The board could, I suppose, issue more 10-vote shares to the founders, but even if the charter permits that, it creates difficult questions.  How much should the founders pay for that extra control?  What’s a good price for it? 

When this first happened, the company was Google, and their solution was to amend the charter to create a new class of no-vote shares that could be issued for acquisitions and so forth without diluting the founders’ control.  (It was also an interesting end-run around the exchange listing rules that prohibit disparately reducing or restricting the voting power of traded shares, because, if anything, issuing new no-vote shares enhanced the voting power of traded shares, relative to their economic stake in the company.)

But it prompted a lawsuit in Delaware, with shareholders arguing that the board and the founders breached their fiduciary duties to shareholders by creating a whole new class of stock to perpetuate the founders’ control.  That lawsuit settled for additional limits on how the no-vote shares would be issued, but in the end, Google got its no-vote Class C shares, which now trade alongside the 1-vote Class A shares.

Mark Zuckerberg was so impressed with Google’s plan that he tried the same thing at Facebook.  To stave off a shareholder lawsuit, he agreed to negotiate with an independent special committee – and the shareholders turned up evidence that independent committee member Marc Andreessen was texting Zuckerberg a play by play of committee deliberations and coaching him on how to negotiate.  Ultimately, Zuckerberg dropped the idea.

Next there was Snap.  Snap went public with a tri-class structure.  The public received no vote shares, while the founders had 10 votes per share, and the founders and other insiders had additional 1-vote shares.  The charter specified that when the founders died, or relinquished most of their 10-vote shares, all shares would convert to 1 vote per share.  But the founders wanted to give away stock to charity while maintaining control!  So they proposed charter amendments that changed the conditions under which the share class structure would collapse, such as, among other things, requiring a sell down of both the 10-vote shares and the 1-vote shares.  Shareholders sued, alleging that the charter amendments had the effect of changing the rights of the public no-vote shares, and therefore could not be effected without a separate vote of the public shareholders under DGCL 242. That case also settled when Snap withdrew the proposed amendments. 

There may be other similar examples but the latest entry in the genre concerns Cloudflare, which is now the subject of at least 3 pending complaints that will presumably be consolidated into a single case.  Fourth verse same as the first: The company went public with a dual class structure, whereby the founders had 10 votes per share and the public had 1 vote per share; the charter provided that when the founders’ holdings of 10-vote shares dropped below a certain threshold, everything became 1-vote per share; the founders eventually got antsy about that bargain and proposed a recapitalization.  After the founders got independent special committee approval, the board proposed charter amendments that create a new class of no-vote shares, and a new class of golden shares with no economic rights but that have 9 votes per share.  All shareholders – public and insiders alike – get what is essentially a dividend of 1 no-vote share per outstanding share.  Then, the founders exchange each 10-vote share for one 1-vote share plus 1 golden share.  Meaning, the founders end up with golden shares to maintain control, and monetizable 1-vote and no-vote shares, though if the founders sell enough of their 1-vote stake, the share structure collapses into a single class.  There are also certain conditions involving the founders remaining with the company, and so forth.

Obviously, the public shareholders are claiming this is a breach of fiduciary duty and a transfer of control rights from the public to the founders, but here’s the thing.

We all remember (boy do we remember) the dust-up in Delaware about revising DGCL 144 to make it easier for controllers cleanse conflict transactions, right?

Well, new DGCL 144 has a carveout: its cleansing procedures do not

Limit judicial review for purposes of injunctive relief of provisions or devices designed or intended to deter, delay, or preclude a change of control or other transaction involving the corporation or a change in the composition of the board of directors;

The most obvious application of that carveout was for activist situations, but the plaintiffs are arguing that because Cloudflare is also a case about a provision or device “designed or intended to deter, delay, or preclude a change of control,” the new cleansing procedures do not apply, and we are back in MFW land.

For those who want to keep track of all this, the case numbers are 2026-0772, 2026-0763, and 2026-0734, and it looks like VC Laster caught them.

In any event, I assume founders have now learned their lessons and these scenarios will eventually fade from view; SpaceX, for example, is going public with an authorized class of no-vote shares in its charter, which presumably will be used for acquisitions and whatnot, so that Musk’s voting power does not have to be diluted with new issuances of 1-vote shares.