Delaware's 2026 Counter-Revolution: The Supreme Court Re-Empowers Boards and Founders While SCOTUS Preserves SEC Disgorgement

The Pendulum Swings Back to the Boardroom

If 2024 and 2025 were the years the Delaware Court of Chancery aggressively policed corporate governance and restricted founder control, 2026 is the year the Delaware Supreme Court firmly hit the brakes. In a rapid-fire series of early 2026 decisions, Delaware’s highest court has systematically dismantled recent Chancery jurisprudence that favored shareholder plaintiffs, signaling a massive shift in how corporate lawyers should structure deals and draft stockholder agreements.

For corporate practitioners, the message from the Delaware Supreme Court is unmistakable: freedom of contract and statutory safe harbors are back in vogue. Meanwhile, on the federal front, corporate defendants facing relief from private litigation will find no such quarter from the Securities and Exchange Commission, as the U.S. Supreme Court just handed the agency a vital enforcement victory.

Resurrecting Founder Control: The Moelis Reversal and SB 21

The most consequential development for dealmakers and startup counsel arrived on January 20, 2026, when the Delaware Supreme Court reversed the controversial 2024 Chancery decision in the Moelis & Co. litigation. Chancery had previously sent shockwaves through the corporate bar by invalidating extensive veto rights and board-composition mandates in founder Ken Moelis’s stockholder agreement, reasoning that such provisions unlawfully stripped the board of its statutory authority under Del. Code Ann. tit. 8, § 141(a).

By siding with Moelis and upholding the stockholder agreement, the Delaware Supreme Court has restored predictability to private equity sponsors and founders who rely on heavy-handed governance agreements to protect their investments post-IPO. But the Court didn't stop there.

Barely a month later, on February 27, 2026, the Delaware Supreme Court upheld the state’s 2025 legislative corporate-law overhaul, commonly known as SB 21. The legislation, which the plaintiff's bar fought tooth and nail, explicitly limits certain shareholder challenges if a transaction is approved by an independent committee or a majority-of-the-minority vote.

"This one-two punch—the Moelis reversal combined with the judicial blessing of SB 21—fundamentally restricts litigation exposure for controlling shareholders and boards in specified approval scenarios."

What this means for practice: You no longer have to tiptoe around Section 141(a) when drafting stockholder agreements with robust negative covenants and board-designation rights. Furthermore, if you are advising a special committee in a conflict transaction, strictly adhering to the SB 21 approval framework provides an ironclad shield against plaintiff strike suits. The days of plaintiffs easily surviving motions to dismiss in controller-led buyouts are over.

Hitting the Plaintiffs' Bar in the Wallet

Delaware didn't just limit the types of claims plaintiffs can bring; it severely curtailed how much they get paid for bringing them. On January 30, 2026, the Delaware Supreme Court slashed a massive Chancery fee award in Tesla’s director-pay litigation from $176.1 million down to $70.9 million.

While $70.9 million is hardly pocket change, a $100+ million haircut is a glaring warning shot. The Delaware Supreme Court is clearly signaling that the era of runaway mega-fees in corporate benefit cases is over. For defense counsel, this provides critical leverage in settlement negotiations. Plaintiffs’ attorneys will have to rigorously justify their lodestar multipliers, making them more likely to accept reasonable early settlements rather than rolling the dice on a skeptical Supreme Court.

Chancery’s M&A Curveball: Revlon Does Not Apply to PBCs

While the Delaware Supreme Court was busy reshaping governance, the Chancery Court handed down a landmark M&A ruling on July 29, 2026, regarding Public Benefit Corporations (PBCs). The court ruled that PBCs are not subject to the traditional rule requiring directors to obtain the highest reasonable price in a sale of control.

Since Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986), standard Delaware corporations entering a cash-out merger have had a singular, unyielding duty: maximize short-term shareholder value. The July 2026 Chancery ruling confirms what ESG advocates have long hoped: PBC directors can legally leave money on the table if a lower-priced acquirer better aligns with the corporation's stated public benefit.

What this means for practice: If you are representing a buyer acquiring a PBC, you cannot rely on Revlon to force the target board to take your client's higher bid over a mission-aligned competitor. For target counsel, this ruling provides the necessary legal cover to prioritize stakeholder impact over pure shareholder premium in a change-of-control transaction.

The Federal Counterweight: SCOTUS Backs SEC Disgorgement

While shareholder plaintiffs are losing ground in Delaware, the SEC is holding its turf in Washington. On June 4, 2026, the U.S. Supreme Court firmly backed the SEC’s disgorgement power, preserving one of the agency’s most potent remedies in securities-fraud enforcement.

Following years of constitutional and statutory challenges that chipped away at the SEC's authority—most notably capping disgorgement as an equitable remedy in cases like Liu v. SEC, 140 S. Ct. 1936 (2020)—many defense attorneys hoped the current conservative supermajority would gut the disgorgement power entirely. The Court declined the invitation.

This is a critical reality check for white-collar defense counsel. While Delaware is making it harder for private plaintiffs to extract massive settlements from boards, the SEC retains its financial teeth. When negotiating with the Enforcement Division, practitioners must operate under the assumption that disgorgement of ill-gotten gains remains fully on the table, requiring aggressive accounting and tracing arguments rather than broad constitutional defenses.

Conclusion

The 2026 landscape requires a bifurcated defense strategy. In Delaware, corporate counsel should aggressively leverage the Moelis precedent and SB 21 to lock in founder control and insulate conflict transactions from judicial second-guessing. But federally, boards must remain hyper-vigilant. The SEC has survived the Supreme Court’s gauntlet with its disgorgement powers intact, ensuring that what corporations save in Delaware shareholder settlements, they might very well lose in federal enforcement actions.