December 18, 2025
What if corporate power can be bargained for—and any fiduciary duties to constrain that power, left behind? Delaware’s latest amendments open the door to just that, reshaping the rules around control, accountability, and the role of contract in corporate governance. In a new draft article, Corporate Due Process, we explore these questions, and offer thoughts on how courts and practitioners can begin to answer them.
Following uncharacteristically contentious and public debates, Delaware adopted in 2024 and early 2025 what are now known as the “Delaware Control Amendments” to its highly influential General Corporate Law (“DGCL”). These amendments were spurred by Elon Musk’s notorious and aggressive efforts to punish Delaware courts for refusing to bless his dominance of Tesla’s board of directors in Tornetta v. Musk and served to reduce the conditions under which a contract controller would be deemed a corporate fiduciary.
Specifically, Delaware amended section 122(18) of the DGCL to authorize directors to fully contract away their control via what we call “corporate control contracts” (CCKs) and section 144 to specify that the right to appoint a majority of directors is the only contractual power that will be deemed “control” giving rise to fiduciary duties. Other states (notably Texas and Nevada) have recently made similar moves.
The law of fiduciaries has long checked discretionary control of other people’s property, notably in corporate governance, where directors owe a corporation duties of care and loyalty. Yet, contract has also had the capacity to modify these duties to an important—but uncertain—extent because neither body of law contains a meta-rule specifying which would “trump” in the event of conflict. Until recently, uncertainty was rarely problematic, because directors did not, and could not, fully contract away their control of the corporation or their concomitant fiduciary duties.
Over the past thirty years a shift has occurred as activist shareholders—in particular, private equity investors—increasingly use contract to control corporations while minimizing fiduciary risk, through the use of CCKs—that is, to contractualize corporate governance. Contractual corporate governance is controversial because it can vest power in a single controller, which can impair basic procedural protections of corporate law, such as shareholder voting and directors’ fiduciary duties.
The heat of the debates over the Delaware Control Amendments, and the speed with which they were enacted—less than a year—appear to have left gaps in the definition of “control” as it can arise under CCKs. The Delaware Control Amendments seek to make contract a more inviting instrument of corporate governance, yet paradoxically may actually make it less predictable.
To reduce the litigable zone of uncertainty—while also preserving key procedural protections that legitimize the use of the corporate form—we argue that courts, practitioners and commentators should look to “due process” values of notice, participation and independence to sort more from less serious problems likely to arise in the use of CCKs. “Due process” values have long served as a baseline check on power. Because the Delaware Control Amendments decouple power from duty, these values will be increasingly important in resolving disputes over the effect of the Delaware Control Amendments.
A draft of the full article can be found here.
Jonathan C. Lipson is Harold E. Kohn Chair and Professor of Law, Temple University Beasley School of Law and Assistant Reporter for the Model Business Corporation Act, the corporate law of over 30 jurisdictions outside of Delaware. Eli Alexander Evans is a JD candidate in the Temple Law Class of 2026 and incoming law clerk at the Delaware Court of Chancery. Ruth Abrams is a JD candidate in the Temple Law Class of 2027.