BANKING LAW

On April 23, 2024, the Federal Trade Commission (“FTC”), in a 3-2 vote, issued its final Non-Compete Clause Rule (“Rule”) which prohibits noncompete clauses in agreements between employees and their workers. This highly anticipated Rule follows a substantially similar proposed rule from the FTC released on January 19, 2023. The Rule will not become effective until 120 days after publication in the Federal Register, and covered employers will be required to comply with the Rule by that effective date, which could come as early as August of this year. By the FTC’s estimate, this ban could affect up to one in five American workers.

In a significant ruling by the Delaware Court of Chancery, specific terms within a stockholder agreement were invalidated. Presided over by Vice Chancellor J. Travis Laster, the case of West Palm Beach Firefighters’ Pension Fund v. Moelis & Co., No. 2023-0309-JTL (Del. Ch. Feb. 23, 2024), scrutinized the limitations imposed on the board of directors’ authority by a stockholder agreement under the Delaware General Corporation Law (“DGCL”). This decision challenges the conventional structuring of stockholder agreements involving a controlling stockholder.