Figure 6
Who is a ‘controlling stockholder’ under DGCL § 144(e)(2)?
A person who satisfies any one of three independent tests — the third prong is the one that matters for founder-led firms.
Controlling stockholder — 8 Del. C. § 144(e)(2)
Any one of these is sufficient
PRONG (i) · MAJORITY VOTES
Owns or controls a
majority in voting power
of outstanding stock
entitled to vote in the
election of directors.
Classical control:
> 50% of votes
§ 144(e)(2)(i)
OR
PRONG (ii) · BOARD APPOINTMENT
Has the right, by
contract or otherwise,
to cause the election
of nominees constituting
a majority of the board.
Structural control:
right to seat majority
§ 144(e)(2)(ii)
OR
PRONG (iii) · FUNCTIONAL EQUIV.
(a) Owns at least
one-third in voting power
AND
(b) exercises managerial
authority functionally
equivalent to (i) or (ii).
Founder / dual-class control:
≥ 1/3 + influence
§ 144(e)(2)(iii)
SAFE-HARBOR PRECLUSION · § 144(b)-(c); § 144(a)(6) carve-outs
If statutory conditions are satisfied, § 144(b) or (c) precludes equitable relief or damages for covered claims.
§ 144(a)(6) preserves authorization/compliance challenges, injunctive review of defensive devices, and aiding-and-abetting
claims. The statutory framework supplements rather than displaces equitable review.
Upheld in Rutledge v. Clearway Energy Group LLC, No. 248, 2025 (Del. Feb. 27, 2026).
Source: 8 Del. C. § 144, as amended by SB 21 (85 Del. Laws ch. 6, Mar. 25, 2025); upheld in Rutledge v. Clearway Energy Group LLC , No. 248, 2025 (Del. Feb. 27, 2026).