SS M&A Litigation Outlook - Flipbook - Page 35
Salzberg v. Sciabacucchi,
No. 346, 2019, 2020 WL 1280785 (Del. Mar. 18, 2020)
Why it is important
In Salzberg v. Sciabacucchi, the Delaware Supreme
Court held that provisions mandating that cases
under the Securities Act of 1933 be brought in a
federal forum – so called “federal-forum provisions”
or FFPs – are not facially invalid when included in
Delaware corporate charters. The Delaware Supreme
Court found FFPs were permitted under the “broad
enabling text” of Section 102(b)(1) of the Delaware
General Corporation Law, reversing the Court of
Chancery’s decision limiting the scope of Section
102(b)(1) to prohibit such provisions. Because
it was ruling on a facial challenge to FFPs, the
Delaware Supreme Court cautioned that there may
be instances in which “as applied” challenges would
render an FFP unenforceable.
Following this decision, many Delaware corporations
are likely to consider adoption of a FFP, while others
that already have adopted a FFP but declined to
enforce it pending the Delaware Supreme Court’s
decision can be expected to exercise their rights.
Please see our prior coverage of the Court of
Chancery’s decision in Sciabacucchi here.
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