Nate Sussman Quoted in Bloomberg Law on Delaware Case Examining “Void” and “Voidable” Stockholder Provisions 

Munger, Tolles & Olson’s Nate Sussman was quoted in Bloomberg Law’s recent article, titled “Moelis Case Hangs On Top Court’s Take on ‘Void vs. Voidable’.”

The article discusses West Palm Beach Firefighters’ Pension Fund v. Moelis & Company, a Delaware Supreme Court case in which Moelis & Company is appealing a Chancery Court decision that invalidated governance rights granted to founder Ken Moelis under a stockholder agreement. The rights gave Ken Moelis broad control over corporate decisions, which the Chancery Court found to be inconsistent with Delaware law requiring board-managed governance.

Following the ruling, Delaware’s legislature enacted S.B. 313, amending Section 122 of the General Corporation Law to expressly permit the adoption of broad stockholder governance rights through private contracts. However, the Moelis case will be decided under pre-amendment law, and the Delaware Supreme Court’s interpretation could potentially shed light on which stockholder governance rights are categorically impermissible even under the amended statute.

Commenting on the Court’s request for supplemental briefing, Nate discussed the distinction between “void” and “voidable” provisions. “The practical implication of a precedent holding that a provision is ‘void’ and not merely ‘voidable’ is that corporations are effectively told there are no circumstances under which they can take a particular action, regardless of the procedures they follow,” he said.  The article quotes Nate alongside other experts, including Lawrence Cunningham of the University of Delaware’s John L. Weinberg Center for Corporate Governance.

Read the Bloomberg Law article. (Subscription may be required)