Delaware Supreme Court in Moelis: Veto Rights Voidable, Not Void – Claim Barred by Laches

On 20 January 2026 the Delaware Supreme Court reversed the widely noted decision of the Court of Chancery in Moelis (Moelis & Company v. West Palm Beach Firefighters’ Pension Fund, No. 340, 2024).

In February 2024 the Court of Chancery had declared veto rights of the founder of Moelis & Company under a 2014 stockholders agreement invalid. It saw in them an interference with the authority of the board of directors to manage the corporation under Section 141(a) DGCL. This unsettled the market, because such rights are common in investor agreements. The legislature responded with Section 122(18) DGCL (in force since 1 August 2024), which expressly enables such agreements.

The Supreme Court based its decision on two points. A breach of Section 141(a) does not automatically lead to nullity (void), but may merely render the arrangement voidable (anfechtbar). Defences such as laches (Verwirkung) are then available. The claim was brought almost nine years after the agreement was concluded and, in the court’s view, was barred by laches. Whether the provisions are compatible with Section 141(a) the court expressly left open.

In practice this means:

• Existing agreements are better protected against late challenges, above all through the passage of time, not through judicial confirmation of their validity.

• Anyone who wishes to challenge governance provisions must act promptly.

• Agreements should be aligned with Section 122(18) DGCL and drafted precisely.

Status: 20 October 2026

NIETZER Rechtsanwälte · Attorneys at Law (USA) · Heilbronn · www.unternehmensrecht.com

This article is for general information purposes and does not replace legal advice in an individual case.