The Delaware Supreme Court’s recent decision in Moelis & Company v. West Palm Beach Firefighters’ Pension Fund distinguished “void” corporate acts from “voidable” ones in a way that will significantly affect future stockholder litigation.[1]  The distinction is important because equitable defenses like laches (untimeliness) are available when stockholders challenge voidable but not void acts.

This post explores one context in which Moelis’s void/voidable distinction creates uncertainty in future stockholder litigation: facial challenges to advance notice bylaws.  Advance notice bylaws became a battleground for stockholder litigation after waves of companies responded to the SEC’s universal proxy rule[2] by adopting “unduly restrictive” and onerous disclosure requirements to impede activist nominations.[3]  It remains to be seen how Delaware courts will draw the void/voidable line in future facial challenges to such bylaws, or how they will approach the next generation of potentially more restrictive bylaws.  As a result, public stockholders should challenge invalid advance notice bylaws promptly after their adoption to avoid the risk of being barred by laches.

In Moelis, a stockholder of Moelis & Company challenged certain provisions of an agreement the company entered with its namesake, Kenneth Moelis, on grounds that the offending provisions invalidly constrained the board’s powers to manage the corporation under Section 141(a) of the DGCL.  The company argued that the stockholder’s claims were barred by laches because the stockholder sued more than three years after the agreement was adopted.[4]  The Delaware Court of Chancery held that laches was unavailable because the offending agreement was void – rather than voidable – by “violat[ing] Section 141(a)” of the DGCL.[5]

The Delaware Supreme Court reversed.  Eschewing a bright-line rule that statutory violations are per se void, the Supreme Court observed that the transactional planners could have given Mr. Moelis his desired governance rights through the charter, but had simply failed to do so.[6]  Because the stockholder had thus failed to “demonstrate[] that there are no lawful means by which Moelis could accomplish its desired governance arrangements,” the “challenged provisions” were “susceptible to cure and therefore voidable.”[7]  The high court then found the stockholder guilty of laches and dismissed the case without reaching the merits.[8]

On the facts of Moelis, the explanation for why the challenged agreement was voidable rather than void appears clear enough: The violation was highly technical and could have been cured easily.[9]  Less clear, however, is how to apply the void/voidable distinction the high court articulated in the context of advance notice bylaw challenges.

On the one hand, the Supreme Court’s seminal decision in Kellner v. AIM ImmunoTech Inc.[10] appears to indicate that invalid advance notice bylaws are necessarily void.  Kellner stated that advance notice bylaws are invalid where they “cannot operate lawfully under any set of circumstances.”[11]  At first glance, it seems intuitive to infer that a bylaw that cannot operate lawfully under any set of circumstances cannot be accomplished by any legal means.

Kellner dedicated one sentence in a footnote to the void/voidable issue, stating without qualification that “[a]n invalid bylaw is ab initio void.”[12]  For support, the Supreme Court cited to its 1979 decision in Michelson v. Duncan, which stated, “[t]he essential distinction between voidable and void acts is that the former are those which may be found to have been performed in the interest of the corporation but beyond the authority of management, as distinguished from acts which are ultra vires.”[13]  Moelis also quoted this exact passage from Michelson favorably,[14] suggesting that the high court intended to preserve the ab-initio-void rule from Kellner.

One the other hand, a careful application of Moelis implies that there are circumstances where Kellner’s ab-initio-void rule breaks down.  Under Section 109(b) of the DGCL, a bylaw may not be “inconsistent . . . with the certificate of incorporation[.]” So if a certificate of incorporation bans a particular type of advance notice bylaw (for instance, one that has a “daisy chain” provision),[15] but the board adopts one anyway, the bylaw is invalid.  But no one would dispute that transactional planners could pass such a bylaw by amending their certificate of incorporation, thus, “accomplish[ing]” their “desired governance arrangements” through lawful means.[16]  Accordingly, under Moelis, where an advance notice bylaw is invalid because it exceeds the limits created by charter, it would appear to be “susceptible to cure and therefore voidable.”[17]  So it would not be ab initio void, as Kellner indicates.

Relatedly, an invalid advance notice bylaw might be voidable rather than void if it was improperly adopted.  For example, a corporate charter might “confer the power to adopt” an advance notice bylaw “upon the directors” exclusively through a formal board meeting and vote.[18]  If the board then adopts a bylaw through a unanimous written consent, the bylaw was adopted in violation of the charter and is therefore invalid.[19]  Yet the board could have adopted the same bylaw by convening a meeting and voting on it instead.  Therefore, the bylaw could have been passed “lawfully” had the board “done [so] in the proper manner[,]” rendering it voidable.[20]  Again, the bylaw would not be ab initio void, as Kellner indicates.

Another issue left untested is how broadly to define a “desired governance arrangement” as Moelis used the phrase, and what ramifications that has in implementing Moelis’s void/voidable test to advance notice bylaws.  In Moelis, the transactional planners “desired” a “governance arrangement[]” in which Kenneth Moelis held a bundle of discrete, clearly identified governance rights.[21]  Any defect in how that was accomplished could be cured by putting the same governance rights in different corporate instruments.

 But in the advance notice bylaw context, transactional planners’ desired governance arrangements are often more open-ended.  Boards impose onerous disclosure requirements to entrench incumbents, not to give one person a particular set of specific governance rights.  And boards can achieve their desired governance arrangement (i.e., entrenchment) through invalid or valid means.  An invalid way is to draft an “unintelligible [advance notice] bylaw” with which stockholders seeking to nominate a candidate “could not fairly be expected to comply.”[22]  But a valid way is to draft a “long, broad, and overly complicated” bylaw that is “burdensome to the point of unreasonable” but nonetheless valid.[23]  Because there are both valid and invalid ways to achieve a desired governance arrangement where incumbents remain empowered, one could credibly argue after Moelis that all invalid bylaws so drafted are in fact voidable because they can always be replaced with less restrictive versions that achieve the same ends.  If that is the case, then Kellner’s ab–initio-void footnote is bad law.

Accordingly, Moelis’s void/voidable dichotomy appears to clash with Kellner’s guidance for how to address facial advance notice bylaw challenges.  Assuming Kellner’s footnote on the topic survived Moelis, facially invalid advance notice bylaws are ab initio void.  But as subsequent courts grapple with Moelis’s (perhaps unintended) ramifications, Kellner’s ab-initio-voidness rule may be limited or overturned.

For stockholder activists, it is safer to avoid the issue altogether and challenge objectionable bylaws within three years of their adoption.  It may be tempting to wait to challenge them on facial grounds to pair that claim with a ripe equitable challenge, heeding the Court of Chancery’s recent guidance that equitable bylaw challenges do not ripen upon the bylaw’s adoption.[24]  But activists should assume Moelis will be read against them and should not rely on a footnote from Kellner when considering whether and when to bring suit.  As new companies go public and creative transactional attorneys develop additional limits on stockholder voting rights, the appearance of delay by stockholder challengers may result in unforced errors with real-world consequences.

ENDNOTES

[1] — A.3d —–, 2026 WL 184868, at **6–10 (Del. Jan. 20, 2026).

[2] 17 CFR § 240.14a-19.

[3] Ele Klein & Sean Brownridge, (More) Observations on the Universal Proxy Card, Harv. L. Sch. Forum on Corp. Gov.(June 6, 2024), available at https://corpgov.law.harvard.edu/2024/06/06/more-observations-on-the-universal-proxy-card/.

[4] 10 Del. C. § 8106 (covered actions must be brought within three years “from the accruing of the cause of such action[.]”).

[5] 310 A.3d 985, 994 (Del. Ch. 2024) (“Moelis Chancery”).  The Court of Chancery issued a separate decision addressing the merits.  See 311 A.3d 809 (Del. Ch. 2024).

[6] — A.3d —–, 2026 WL 184868, at *7 (“Because all the disputed actions taken at the meeting could have been accomplished lawfully by the defendants had they done them in the proper manner [] the actions were deemed voidable, not void, and therefore subject to the equitable defenses of laches and acquiescence.”).

[7] Id.

[8] Id. at **10–17.

[9] For a discussion of the technical distinctions between the “procedurally different means” that were available to the transactional planners in Moelis, see Ann Lipton, You can tell there’s work I’m avoiding because here I am posting about Moelis on a Tuesday, Bus. L. Prof. Blog (Jan. 20, 2026), available at https://www.businesslawprofessors.com/2026/01/you-can-tell-theres-work-im-avoiding-because-here-i-am-posting-about-moelis-on-a-tuesday/.

There are other reasons one might disagree with how the Moelis court drew the void/voidable line.  For instance, a previous Supreme Court decision, Waggoner v. Laster, stated that the equitable defense of estoppel had “no application” where the “corporate contract or action approved by the directors or stockholders is illegal or void.”  581 A.2d 1127, 1137 (Del. 1990).  That decision favorably quoted secondary authority for the proposition that estoppel had “no application to an agreement or instrument which is illegal because it violates an express mandate of law[.]”  Id. (internal quotation marks omitted) (emphasis added).  The lower court’s holding in Moelis Chancery that statutory violations are necessarily void appears to be a direct application of Waggoner, which it cited.  See Moelis Chancery at 994 n.12.  The high court did not address Waggoner when reversing the Court of Chancery on this point, despite canvassing other void/voidable authority.  See — A.3d —-, 2026 WL 184868, at **6–8 (collecting authorities).

There are advantages to the bright-line void/voidable rule for statutory compliance that Moelis Chancery fashioned based on Waggoner and related authority.  One is certainty for practitioners, because a bright-line rule is easy to understand and explain to clients.  Another is the conservation of judicial resources, because a bright-line rule is easy for courts to administer.  A third is the promotion of legal compliance by transactional planners, because a bright-line rule would discourage attorneys from pushing the limits of legality when drafting corporate instruments on a gamble that no timely challenger would emerge. Scholars and analysts may wish to debate the optimal void/voidable rule further, though a full treatment is beyond this post’s scope.

[10] 320 A.3d 239 (Del. 2024).

[11] Id. at 258.

[12] Id. at 262 n.153.

[13] Id. (quoting 407 A.2d 211, 218–19 (Del. 1979)).

[14] — A.3d —-, 2026 WL 184868, at *7.

[15] Cf. Wright v. Farello, 2025 WL 3012956, at *6, *9 (Del. Ch. Oct. 27, 2025).

[16] — A.3d —-, 2026 WL 184868, at *7.

[17] Id.; see also id. at *10 (stating as part of its voidability ruling that the stockholder had failed to identify any source of “Delaware law that would stand in the way of the adoption of the challenged provisions by charter amendment”).

[18] 8 Del. C. § 109(a).

[19] Kellner, 320 A.3d at 246 (“In a challenge to the adoption [] of a Delaware corporation’s advance notice bylaws [] the court should consider [] whether the advance notice bylaws are valid as consistent with the certificate of incorporation”).

[20] — A.3d —-, 2026 WL 184868, at *7.

[21] Id. 

[22] Kellner, 320 A.3d at 266–67.

[23] Wright, 2025 WL 3012956, at *1, **4–5, *10 (reviewing challenge to advance notice bylaw’s restrictive “Acting in Concert,” “Proposing Person,” and “Associated Person” definitions; holding bylaw valid and stating that “reasonableness” review is “reserved for as-applied challenges”).

[24] See Siegel v. Morse, 2025 WL 1101624, at *1 (Del. Ch. Apr. 14, 2025) (dismissing as unripe an as-applied (equitable) challenge to advance notice bylaw adopted to “mount a more effective defense” to activism because no proxy contest was ongoing) (internal quotation marks omitted).

James Janison is an associate at the law firm of Johnson van Kwawegen LLP.