Cloudflare's stock restructuring faces legal challenge under Delaware's new corporate law
By
Mike Leonard
Summary
Cloudflare Inc. is proposing a capital restructuring that would replace its dual-class stock with a tri-class structure, allowing founders to maintain control while offloading billions in nonvoting shares. The move is being challenged in court as a major test of Delaware's newly rewritten corporate laws (Senate Bill 21), with investors arguing the restructuring falls outside the law's self-dealing safe harbors.
Source
bskyCloudflare's stock restructuring faces legal challenge under Delaware's new corporate lawnews.bloomberglaw.comKey quotes
· 3 pulledThe reorganization would replace Cloudflare's dual-class stock, including 10-vote shares held by insiders, with a tri-class structure engineered to let the firm's founders keep their grip while offloading nonvoting shares worth billions.
Investors targeting the 'best of both worlds' reshuffling in court say it falls outside self-dealing safe harbors found in the legislation, state Senate Bill 21.
A proposed capital restructuring at Cloudflare Inc. is poised to serve as a major test of the seismic legal overhaul last year that rewrote Delaware's influential corporate laws.
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