Delaware Sees First Court Challenge Under Enhanced Director Safeguards

Short summary

The Delaware Court of Chancery applied the 2025 amendments to Section 144 for the first time in Ayers v. Foley, dismissing claims challenging a $50M equity grant to a founder while allowing director compensation claims to proceed. The amendments provide safe harbor protections for directors in interested transactions and a heightened presumption of disinterestedness for public company directors. Plaintiffs must now overcome these new statutory hurdles to maintain derivative actions.

• •Delaware Court of Chancery first applies 2025 Section 144 amendments in Ayers v. Foley
• •Safe harbor protections and heightened disinterestedness presumption create new hurdles for derivative plaintiffs
• •Court dismissed founder equity grant claims but allowed director compensation claims to proceed

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