The main types of companies formed in Delaware are corporations, limited liability companies (LLCs), limited partnerships (LPs) and limited liability partnerships (LLPs). General partnerships (GPs) may also be formed, but, as a practical matter, entities that act as “general partners” to limited partnerships are still formed as an entity with limited liability (such as an LLC).

The choice of entity form generally depends on liability protection, taxation, funding goals, ownership structure and the nature of the business.

Foreign investors generally use the same entity forms as domestic investors. One notable exception is the S corporation. An S corporation is a corporation that has elected to be treated as a pass-through entity for federal tax purposes and is subject to eligibility requirements that prohibit non-resident aliens from owning its stock. As a result, foreign investors generally cannot invest through or hold interests in an S corporation.

Fundamentally, stockholders have the right to share in the profits of the company and in the distribution of its assets upon liquidation (subject to the priority rights of others, such as creditors). The full set of stockholder rights is set forth by the Delaware General Corporation Law (DGCL) and the company’s governing documents, while the relative rights of holders of different classes or series of stock are bespoke and established by a company’s certificate of incorporation.

A company’s shares are generally treated equally by default, but companies have a significant degree of latitude to create and issue different classes of securities with varying rights, powers and privileges. The most common classes of securities are common and preferred stock. Common stock represents the basic form of corporate equity. Preferred stock has certain rights, preferences and privileges typically set forth in the company’s certificate of incorporation or the applicable certificate of designation.

A company can have one class of stock or multiple classes of stock with varied rights. 

Common stock generally carries fundamental equity ownership rights, including the right to vote on certain corporate matters, the right to receive dividends if and when declared by the board of directors and the right to share in the company’s residual assets upon liquidation. However, holders of common stock typically rank behind creditors and preferred stockholders with respect to dividend payments and distributions in a liquidation, receiving payment only after senior claims have been satisfied.

Preferred stock is a customisable class of equity that generally has priority over common stock with respect to dividends and liquidation distributions but often carries limited or no voting rights. Alternatively, companies may issue super-voting shares, which are a class of stock with enhanced voting rights (such as ten votes per share).

Delaware does not impose minimum capital requirements for companies.

Corporations and LLCs can be formed with just one stockholder or member. Partnerships, by their nature, require two or more persons to serve as partners.

Delaware entities may be owned by individuals or entities regardless of their residence or jurisdiction of formation.

Shareholder agreements and joint venture agreements are commonly used in private companies to allocate governance rights, economic rights and other arrangements among the parties. In the public company context, companies frequently enter into co-operation agreements with activist shareholders, typically structured as shareholder agreements between the company and the activist investor.

Without limiting the board of directors’ statutory authority to manage the business and affairs of the company, recent amendments to the DGCL expressly authorise companies to enter into governance agreements with one or more stockholders in exchange for consideration in an amount determined by the board of directors. Such agreements may be used to:

• restrict or prohibit the company from taking specified actions;
• require the approval or consent of one or more persons or bodies before the company may take specified actions (which persons or bodies may include the board of directors or one or more current or future directors, or stockholders); and
• covenant that the company or one or more persons or bodies will take, or refrain from taking, specified actions (which persons or bodies may include the board of directors or one or more current or future directors, or stockholders).

In the public company context, shareholder agreements between companies and activist shareholders typically include designated board seats for individuals selected by the shareholder, the right for such designees to serve on specific board committees, a commitment that the shareholder will vote in favour of management’s director nominees and proposals at future stockholder meetings, standstill restrictions where the shareholder agrees not to take certain actions (such as increasing their ownership beyond a prescribed cap), an undertaking by the company to take specified actions, information sharing agreements and mutual non-disparagement provisions.

Shareholder agreements are generally enforceable and commonly appear in a company’s public filings as material agreements.

Companies are generally required to hold an annual meeting of stockholders, unless stockholders are able to meet the requirements to act by written consent in lieu of an annual meeting. Stockholders must receive notice of the annual meeting not less than ten and no more than 60 days in advance of a meeting, which is the same range for companies to set the record date of the meeting. 

Annual meetings typically give stockholders the opportunity to vote for the election of directors, advisory votes on executive compensation (“Say-on-Pay”), auditor ratification and other proposals submitted by management or stockholders.

Companies may also hold special meetings to give stockholders the chance to act on urgent matters that arise before the next regularly scheduled annual meeting, such as voting on mergers and acquisitions, amending the charter or by-laws, issuing stock and removing or electing directors. The purpose of the special meeting of stockholders must be specified in the company’s meeting notice, which generally must be delivered to stockholders in the same 10-to-60-day range, although some extraordinary matters being considered require notice be given at least 20 days before the meeting.

A company’s board of directors has a statutory right to call a special meeting of stockholders for any proper matter of stockholder action.

In contrast, stockholders only have the right to call a special meeting if the company’s certificate of incorporation or by-laws grant them such a right. Therefore, a stockholder’s right to call a special meeting is contractual in nature and subject to the requirements and procedures described in the certificate of incorporation or by-laws. Typically, these requirements stipulate that stockholders, either individually or when aggregated with other demanding stockholders, must own a certain amount of the company’s outstanding stock, such as 10% or 20%, to be eligible to call for a special meeting.

In advance of a meeting, stockholders receive a notice of meeting, proxy statement, proxy card or voting instruction form, and the company’s annual report (for annual meetings). Proxy statements for annual meetings describe the matters to be voted on and provide information about the company, its directors and executive officers, corporate governance and other disclosures relevant to the meeting. Proxy statements for special meetings include disclosures tailored to the matters being considered at the special meeting.

Stockholders have the right to inspect a complete list of the stockholders entitled to vote at a meeting. The company is required to make this list available for stockholders to examine for a period of ten days ending on the day before the meeting date. Provided the stockholder submits a request demonstrating a proper purpose, stockholders also have the right to inspect a company’s books and records, which includes a company’s certificate of incorporation and by-laws, stockholder meeting minutes and consents, the company’s communications with stockholders generally, board and committee meeting minutes and materials, annual financial statements, certain agreements with stockholders and director and officer questionnaires. Stockholders may also be entitled to obtain materials beyond this list, such as board communications, if certain conditions are met.

Stockholder meetings can be held remotely if authorised by a company’s board of directors and if the company implements certain measures to (i) verify that each person deemed present and permitted to vote at the meeting is a stockholder or proxyholder, (ii) provide a reasonable opportunity to participate and to vote and (iii) maintain appropriate records of votes and actions.

The default quorum for stockholder meetings is generally the presence of a majority of the shares entitled to vote. However, a company can set a different quorum requirement in its certificate of incorporation or by-laws as long as it is set as at least one third of the total number of shares entitled to vote.

A company can generally specify the voting standards in its certificate of incorporation or by-laws, but certain corporate actions, such as charter amendments or the approval of a merger, require minimum votes that can be increased only in a company’s certificate of incorporation.

For director elections, companies generally use a plurality or majority voting standard.

Under plurality voting, director nominees receiving the most “for” votes are elected to the board until all available board seats are filled. In an uncontested election, where the number of director nominees is equal to the number of available board seats, this means that a nominee can be elected to the board by receiving a single “for” vote. But in a contested election, where the number of nominees exceeds the number of available seats, plurality voting ensures that only the nominees receiving the greatest number of votes will be elected to the board.

Companies with majority voting require board nominees to receive more “for” votes than “against” votes to be elected. This voting standard is generally only used for uncontested elections.

In the absence of a voting standard set by the company, directors will be elected by a plurality voting standard and other resolutions will pass with the affirmative vote of a majority of the shares present and entitled to vote on the matter.

Stockholders are generally required to approve certain corporate actions, including the election and removal of directors, amendments to the certificate of incorporation, mergers or consolidations, sales of all or substantially all of a company’s assets and the dissolution of the company. The company’s certificate of incorporation or by-laws, as well as the applicable rules of the stock exchange on which the company is publicly listed, may require stockholder approval of additional corporate actions, such as amendments to equity compensation plans and certain share issuances.

Companies generally have flexibility to specify voting standards in their certificate of incorporation or by-laws, and these voting standards can vary by company and/or resolution (such as majority of votes cast, majority of shares outstanding and supermajority thresholds). For certain corporate actions, however, the DGCL prescribes minimum voting requirements that may be increased, but not decreased, in the certificate of incorporation.

Stockholders can vote in person at the meeting or authorise another person to vote on their behalf by proxy. Stockholders can, and often do, vote in advance of the meeting electronically, by telephone or by mail.

A company’s shares are generally treated equally by default, but companies can issue multiple classes or series of stock with different voting rights, including dual-class structures in which one class has greater voting power than another.

In the absence of a restriction in a company’s certificate of incorporation or by-laws, stockholders are generally free to nominate directors or present business proposals at stockholder meetings. However, many companies have adopted advance notice provisions in their by-laws permitting only those stockholder nominations or proposals that duly comply with the advance notice provisions to be considered at the meeting. These provisions typically require stockholders seeking to nominate directors or submit proposals to disclose information regarding their identity, interests and related arrangements, and to satisfy certain procedural requirements as a condition to having such nominations or proposals properly brought before the meeting. The rules promulgated under the Securities Exchange Act of 1934 include additional mechanisms through which stockholders can nominate directors and submit proposals for consideration at stockholder meetings.

Stockholders can challenge the validity of director elections or other stockholder votes through the Delaware Court of Chancery. The grounds for a challenge depend on the circumstances but commonly include violations of the DGCL or the company’s certificate of incorporation and by-laws, disclosure deficiencies, breaches of fiduciary duty or defects in the meeting or voting process. The applicable procedures and remedies vary depending on the nature of the claim.

The role and influence of institutional investors have grown over time. Institutional investors typically make up a majority of a company’s stockholder base, and they can influence and monitor companies through a variety of direct and indirect means. These include engaging with the board and management, supporting or opposing director nominees and voting on proposals, including Say-on-Pay proposals. In some cases, institutional investors exercise their right to submit their own stockholder proposals, nominate dissident director nominees, inspect corporate books and records or pursue litigation.

Proxy advisory firms are third parties hired primarily by institutional investors to provide research about companies and to make proxy voting recommendations on management and stockholder resolutions.

Stockholders who hold shares through a nominee or broker (in “street name”) generally receive the same meeting materials and voting information as stockholders that hold their shares in “record name”. Street name stockholders can instruct the nominee or broker how to vote their shares but generally may not vote directly at a stockholder meeting unless they obtain the appropriate authorisation from the record holder, such as a legal proxy.

Unless otherwise provided by a company’s certificate of incorporation, any action that may be taken by stockholders at a meeting may instead be taken by written consent by stockholders having at least the minimum number of votes that would be necessary to authorise or take such action at a meeting at which all of the shares entitled to vote were present and voting – or at least an absolute majority of the outstanding voting shares. The written consent must set forth the action to be taken, be signed by the requisite number of stockholders of record and be timely delivered to the company.        

Unless the company’s certificate of incorporation specifically grants pre-emptive rights, existing stockholders have no right to buy a proportionate share of newly issued stock and may therefore be diluted by a stock issuance.

Shares are generally freely transferable. However, transfer restrictions may be imposed by the company’s governing documents or by contractual agreements. Such restrictions, which are primarily features of private and closely held companies, commonly include rights of first refusal, co-sale rights, lock-up provisions or requirements for company approval.

Public company stockholders can ordinarily trade their shares freely. Nevertheless, federal securities laws may restrict transfers by certain stockholders, such as insiders and affiliates, and may limit the resale of certain types of shares, including restricted and control securities.

Subject to any restrictions in a company’s governing documents, a stockholder can generally pledge or grant security interests over their shares.

Delaware law does not generally require stockholders to disclose their interests in a company or changes in a stockholder’s interests. In certain circumstances, a company’s governing documents may require stockholders to disclose their ownership interests, such as to comply with advance notice by-law requirements.

Federal securities and antitrust laws may, however, require stockholders to disclose their ownership interests in certain companies upon exceeding specified ownership thresholds.

A company may cancel or retire shares that it has repurchased from stockholders, or it may hold those shares as treasury stock for potential future reissuance.

A company may acquire, hold and otherwise transact in its own shares. However, share repurchases and redemptions are restricted if they would impair the company’s capital and must comply with any redemption rights and procedures set out in the company’s certificate of incorporation and the DGCL.

Dividends are paid if and when declared by the board of directors.

Dividends may generally be paid only:

• out of the company’s surplus; or
• if the company has no surplus, out of its net profits for the current and/or preceding fiscal year.

The primary means by which stockholders appoint or remove directors is by exercising their right to vote at stockholder meetings. Consistent with this right, Delaware law generally recognises stockholders’ ability to nominate candidates for election to the board of directors. The DGCL is nearly silent on how a stockholder should nominate a director candidate for election, so in the absence of a restriction in a company’s governing documents, stockholders are generally free to nominate directors at stockholder meetings. However, many companies have adopted advance notice by-laws that permit only those stockholder nominations that comply with the applicable advance notice requirements to be brought before a stockholder meeting.

Advance notice by-laws typically require a stockholder seeking to nominate director candidates to provide timely notice and specified information regarding the nominating stockholder, the proposed nominees, their ownership interests, relationships, agreements and other matters relevant to the nomination. A company’s board of directors sometimes rejects a stockholder’s director nomination by claiming that it fails to comply with the applicable advance notice requirements. However, advance notice provisions may be struck down by Delaware courts if they unreasonably interfere with the stockholder franchise or are applied inequitably under the circumstances.

Unless otherwise provided in a company’s governing documents, vacancies in the board of directors may be filled by a majority of the directors then in office or by a sole remaining director. Newly created directorships can be filled either by a stockholder vote or by a vote of the directors.

Like the right to elect directors, the right to remove directors is a fundamental element of stockholder authority. Any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except in certain cases involving a staggered board or cumulative voting. For a staggered board, directors generally may only be removed for cause unless the certificate of incorporation contains a provision permitting removal without cause.

Because the DGCL vests the management of the company’s business and affairs in the board of directors, stockholders generally cannot directly require directors to take a particular action. However, stockholders do have the right to bring binding resolutions on matters that Delaware law, or a company’s certificate of incorporation or by-laws, commit to stockholder approval, such as amending the by-laws. In those circumstances, a duly approved stockholder resolution may require the board to implement or give effect to the stockholders’ decision. Stockholders may also challenge board decisions through litigation if they believe the directors have violated Delaware law, breached their fiduciary duties, or acted inconsistently with the company’s governing documents. But a stockholder’s mere disagreement with an action taken or decision made by the board is generally insufficient to justify judicial intervention. Under the business judgement rule, courts typically defer to board decisions and presume that directors acted on an informed basis, in good faith, and in the honest belief that their actions were in the best interests of the company.

Nevertheless, a stockholder may challenge board action in the Delaware Court of Chancery. If the court determines that the directors failed to comply with their legal or fiduciary obligations, it has broad equitable powers and, where appropriate, may grant injunctive or other equitable relief to prevent, delay, or remedy unlawful board action. The nature and scope of any relief will depend on the specific facts and circumstances of the case.

Stockholders do not have a statutory right to appoint or remove a company’s auditors. Instead, the appointment and removal of a company’s auditors are typically matters for the board of directors, which manages the business and affairs of the company.

Public company stockholders are often asked to ratify the appointment of the company’s independent auditor through a non-binding vote at the annual meeting.

Delaware law does not generally require companies to report on their corporate governance arrangements. However, public companies are typically required under federal securities laws and stock exchange rules to include information regarding their corporate governance practices in their annual proxy statement and other SEC filings.

‘Controlling stockholders’ can owe fiduciary duties to the companies they control and their minority stockholders. Generally, controlling stockholders have an obligation not to harm the company or the minority stockholders through intentional, knowing or grossly negligent action.

Delaware courts have traditionally closely scrutinised interested transactions where the controlling stockholder has a conflict of interest because it receives a benefit that is not shared proportionately with the other stockholders. However, recent amendments to the DGCL §144 have established statutory safe harbours for conflicted transactions. A transaction can be cleansed, and a company’s directors and officers will be entitled to the statute’s safe harbour protections and generally will not be subject to liability or equitable relief solely by reason of the conflict, if:

• the transaction is approved or recommended in good faith by a majority of the disinterested directors on a committee with at least two disinterested directors; or
• the deal is approved by a majority of votes cast by informed and disinterested stockholders.

For a controlling stockholder “go-private” transaction, both the disinterested committee and stockholder votes are required for safe harbour protection. If such procedures are not in place, the conflicted transaction must generally meet the entire fairness standard.

Under the recently amended DGCL §144, a controlling stockholder is now statutorily defined as a stockholder with the:

• majority voting power;
• contractual power to cause the election of a majority of the board of directors; or
• equivalent of majority voting power by virtue of ownership or control of at least one-third of the voting power of the outstanding stock of the corporation entitled to vote generally in the election of directors or in the election of directors who have a majority in voting power of the votes of all directors on the board of directors and power to exercise managerial authority over the business and affairs of the corporation.

Ultimately, whether a controlling stockholder is subject to fiduciary duties and corresponding liability depends on the specific facts of the case and must be assessed based on the particular circumstances.

A company’s insolvency significantly limits stockholders’ rights. As a general matter, creditors have priority over stockholders and must be paid before any distribution can be made to stockholders. As a result, stockholders are often entitled to receive value only after all creditor claims have been satisfied.

Most insolvency issues are resolved in federal bankruptcy courts under the provisions of the Federal Bankruptcy Code. In certain circumstances, however, Delaware receivership proceedings may offer a more efficient and cost-effective alternative. Under Delaware corporate law, a receiver is a neutral third party appointed by the Delaware Court of Chancery to take control of a company’s assets, manage its business and protect the interests of creditors and stockholders during insolvency. Although the primary function of a receiver is to liquidate a company, circumstances may warrant a receiver’s continued operation of the company for the purpose of conserving its assets and eventually restoring them to a condition of solvency.

Stockholders may still bring claims against an insolvent company and its directors. Once a company becomes insolvent, however, creditors also have standing to bring derivative claims on the company’s behalf, benefit from the directors’ fiduciary duties and have priority over stockholders in distributions of the company’s assets.

A stockholder has a variety of legal remedies against a company. Through litigation, a stockholder may challenge alleged violations of Delaware law (such as the failure to hold a timely annual meeting) or federal securities law (such as disclosure deficiencies), and actions taken in contravention of the company’s governing documents.

The nature and availability of any remedy depends on the specific facts and circumstances of the case. Where appropriate, a court may award temporary or permanent equitable relief, such as enjoining a transaction from proceeding, requiring corrective disclosures, compelling stockholder meetings or other remedies designed to address unlawful corporate action. Monetary damages may also be available in certain circumstances.

Stockholders may pursue claims directly against directors and officers for alleged breaches of fiduciary duty or other violations of Delaware or federal law. Typical claims arise from the fiduciary duties of care and loyalty that directors and officers owe to the corporation and its stockholders, and may involve allegations of conflicts of interest or self-interestedness, misuse of corporate assets, usurpation of corporate opportunities and oversight failures. Stockholders may also bring claims arising under the federal securities laws pertaining to disclosure violations.

Delaware law provides directors and officers with significant protections, including the business judgement rule, which generally presumes that fiduciaries acted on an informed basis, in good faith and in the honest belief that their actions were in the best interests of the corporation. In addition, many corporations include charter provisions permitted by the DGCL that limit or eliminate certain monetary liability for directors, and increasingly officers, for breaches of the duty of care. Nevertheless, directors and officers may remain subject to liability for breaches of the duty of loyalty, acts taken in bad faith, transactions involving improper personal benefits and other claims for which exculpation is unavailable.

A stockholder may bring claims either directly or derivatively, depending on the nature of the alleged harm. Direct claims generally seek to remedy injury suffered by the stockholder personally, while derivative claims seek relief on behalf of the corporation for harm allegedly inflicted on the corporation. In a derivative action, the stockholder is typically required to either demand that the board pursue the claim or plead particularised facts demonstrating that such a demand would be futile.

Derivative actions are commonly used to assert claims against directors, officers, controlling stockholders or third parties for breaches of fiduciary duty, corporate waste, unjust enrichment, oversight failures or other misconduct that allegedly injured the corporation.

Shareholder activism in Delaware-incorporated companies is governed by a mixture of Delaware corporate law (including the DGCL and judicial decisions), federal securities laws, stock exchange rules and a company’s governing documents.

Stockholders have several mechanisms to influence corporate governance. Those include stockholder rights to vote, nominate candidates for election to the company’s board of directors, solicit the voting proxies of other shareholders, submit stockholder proposals, communicate with other stockholders, inspect corporate books and records, bring litigation and, where permitted by the company’s governing documents, call special meetings or act by written consent.

On the other hand, companies are also permitted under the same framework to adopt certain defensive measures aimed at promoting orderly corporate decision-making and director elections. For instance, a company may adopt advance notice by-laws requiring stockholders seeking to nominate directors or propose business at a meeting to satisfy detailed disclosure requirements. Delaware courts generally enforce reasonable advance notice provisions, although such provisions may be invalidated if they are applied inequitably or operate to improperly restrict the stockholder franchise. 

The objectives of activist stockholders vary depending on the company, industry and circumstances, but are generally aimed at increasing stockholder value and improving corporate performance.

Common activist objectives include:

• obtaining board representation or changes in board composition;
• replacing senior management;
• improving operational performance, including through the adoption of artificial intelligence (‘AI’);
• pursuing strategic alternatives, including a sale of the company, spin-off, separation, or other transaction;
• opposing announced mergers and acquisitions that the activist believes undervalue the company or result from a flawed sale process;
• increasing returns of capital through dividends or share repurchase programmes;
• modifying capital structure or financing arrangements;
• enhancing corporate governance practices; and
• improving disclosure, transparency, or stockholder engagement.

In the mergers and acquisitions context, activists may seek a higher transaction price, a more robust sale process, the identification of alternative bidders, changes to transaction terms or the termination of a proposed transaction altogether. The specific objective frequently evolves as a campaign develops and may depend on the reaction of the board, the support of other stockholders and market conditions.

Although activists employ a variety of strategies, successful campaigns generally seek to persuade other stockholders that the activist’s proposed course of action will create greater value than the company’s existing strategy or the actions proposed by the board of directors.

There is a range of strategies available to activist stockholders to attempt to influence a company’s board of directors and build support within the stockholder base. Activists typically begin a prospective engagement by accumulating an ownership stake in the company. The exact size of the stake may vary, and while some activists acquire large stakes, others have successfully launched campaigns with modest holdings. 

Once an investment position has been established, activists typically engage privately with management and the board to advocate for changes before pursuing public measures.

If private engagement is unsuccessful, activists may employ a variety of public and legal strategies, including:

• seeking board representation through negotiations or proxy contests;
• soliciting proxies to support dissident director nominees or stockholder proposals;
• publicly communicating with stockholders through investor presentations, open letters, regulatory filings and media engagement;
• ‘Withhold’ campaigns, where activist investors encourage their fellow shareholders to withhold their votes from the election of incumbent directors to signal disapproval; and
• forming groups with other investors.

The agenda pursued by activists varies, but commonly includes changes to board composition or management, operational improvements, capital allocation changes, share repurchases, increased dividends, strategic transactions, sales of the company, spin-offs, governance reforms or opposition to mergers and acquisitions that the activist believes undervalue the company or result from a flawed process. In many cases, activists seek to persuade other stockholders that their proposed strategy will create greater value than the company’s existing course of action.

Activists target companies across a broad range of market capitalisations. Large-cap companies continue to attract significant attention because of their liquidity, visibility and institutional ownership. At the same time, activism has become increasingly common among small-cap companies where activists may perceive greater opportunities to influence strategy, governance, capital allocation or strategic transactions. Activists also increasingly focus on companies they view as vulnerable due to operational underperformance, strategic uncertainty, valuation dislocations or governance concerns, regardless of company size.

Although activism occurs across virtually every industry, certain sectors have attracted a disproportionate amount of activist attention in recent years. Technology companies have been among the most frequently targeted sectors, particularly in connection with strategic alternatives, capital allocation, operational performance and mergers and acquisitions. Industrials, consumer cyclical, healthcare, financial services, energy and real estate companies have likewise experienced significant activist activity. Activists are often drawn to industries undergoing disruption, consolidation or rapid technological change where they believe value can be unlocked through strategic, operational or governance changes.

More recently, mergers and acquisitions have emerged as a major focus of activist campaigns. Activists have increasingly sought either to encourage companies to pursue strategic transactions or to oppose announced transactions that they believe undervalue the company or result from a flawed sale process. There has been an almost 50% increase in push-for-sale demands at U.S.-based companies during the first half of 2026, underscoring the growing importance of M&A-related activism.

Another emerging trend is the growing focus on AI and technology deployment. Activists have increasingly scrutinised companies’ AI strategies, capital allocation decisions, operational execution, and board oversight relating to AI initiatives, particularly in the technology, software, internet and data-intensive sectors.

While shareholder activism was historically associated primarily with a relatively small number of activist hedge funds, the range of investors participating in activist campaigns today has expanded considerably. Traditional activist hedge funds remain among the most active market participants and continue to pursue campaigns involving board representation, strategic transactions, capital allocation, operational performance and governance reforms. Well-known activist funds continue to initiate a significant number of campaigns, particularly in the United States.

At the same time, activism is no longer limited to dedicated activist funds. Institutional investors, private investment firms, family offices, founders, strategic investors and ‘occasional activists’ have become increasingly active. In particular, recent campaigns have demonstrated that stockholders without a traditional activist profile can successfully influence corporate strategy, oppose transactions, seek board representation or advocate for governance changes.

Occasional activists have played a particularly important role in M&A-related activism. Such activists accounted for a majority of the oppose-sale campaigns in 2026 and achieved a meaningful degree of success. More broadly, a stockholder does not necessarily need a large ownership position or an established activist reputation to attract support from other stockholders if it can articulate a compelling thesis and effectively communicate with the market.

Publicly available data indicates that activist campaigns regularly achieve at least partial success, although outcomes vary depending on the nature of the demand and the company involved. In the United States, activists continue to obtain board representation with considerable frequency. In 2025, activists won at least one board seat across a majority of campaigns, and that trend continued in 2026. Many of these outcomes were achieved through negotiated settlements rather than contested elections.

Similarly, M&A-related activism has also produced meaningful results. Activists achieved success rates in oppose-sale campaigns that have not been observed since 2018. Those successful outcomes included transactions being abandoned, improved transaction terms, governance changes or other concessions obtained from the target company.

More broadly, the effectiveness of an activist campaign depends on numerous factors, including the nature of the activist’s thesis, support from institutional investors, recommendations from proxy advisory firms, the company’s performance and governance profile and the specific remedy being sought. While no single success rate applies across all forms of activism, recent data suggests that activists continue to have a meaningful ability to influence corporate decision-making and obtain at least partial satisfaction of their demands.

Companies may consider proactively engaging with their stockholders and maintaining a clear and credible strategy for long-term value creation. For any given engagement, the appropriate response will depend on the activist’s objectives, the merits of its proposals, the company’s stockholder base and the level of support the activist has attracted from institutional investors and proxy advisory firms.

In many cases, activist campaigns are resolved through negotiated settlements or co-operation agreements, which may include board representation, governance changes, strategic reviews or other compromises. Recent market data indicates that settlements have become prevalent in resolving activist situations.

Where a company disagrees with an activist’s proposals, it will often seek to communicate its strategy and value-creation plan to stockholders through an enhanced investor engagement programme. Companies frequently engage with significant stockholders, proxy advisory firms and other stakeholders to explain the board’s strategic rationale, capital allocation decisions, governance practices and performance objectives. These engagements present the company with an opportunity to rebut the activist’s thesis for change and convince the broader stockholder base that the company’s current management and director teams can generate stockholder value.

Companies may also proactively review their governance profile and preparedness measures, even before an activist engagement. Depending on the circumstances, companies may consider advance notice by-laws, shareholder rights plans, provisions limiting the ability of shareholders to call special meetings, board refreshment initiatives and other governance changes. Delaware courts closely scrutinise actions that improperly interfere with the stockholder franchise, and any defensive measures must be implemented and applied consistently with directors’ fiduciary duties.

Companies contemplating significant transactions should also be prepared to articulate clearly why the transaction is being pursued, the alternatives considered, the process followed by the board and why the proposed course of action creates greater value than available alternatives. Recent activist campaigns have frequently focused on perceived deficiencies in valuation, process, governance, operational performance, capital allocation and strategic execution.