Battle over shareholder pacts strains Delaware’s business courts

Sweeping changes to Delaware corporate law could give more power to influential shareholders, letting them make more deals on behalf of the company without board oversight. Business complaints Delaware’s lawmakers pushed the measure forward after complaints from companies and others that several of the Chancery Court’s decisions threatened to undermine the validity of existing stockholder agreements. “The uncertainty that it created was an invitation to more litigation," said Lawrence Hamermesh, a former professor at Widener University’s Delaware Law School. One opponent, Joel Fleming, a partner at the law firm Equity Litigation Group, said it moves Delaware away from its traditional “board-centric model," which helped make the state attractive to investors and companies alike. “I don’t think that people are just going to start entering into agreements that eviscerate the function of a board under Delaware law," said William Regner, a partner with law firm Debevoise & Plimpton.