Court Questions Impact of Safe Harbor Law
Vice Chancellor Will pressed Meyer on whether Delaware’s newly amended corporate safe harbor laws, under S.B. 21, could affect the case. The updated legislation extends business judgment protections to controlling stockholders even in conflicted transactions. Several Supreme Court appeals are pending over its scope and constitutionality.
“It would be helpful to see how you see this case unfolding,” Will remarked, signaling the court’s concern over how the evolving statute may shape corporate governance disputes going forward.
Semrush, valued at over $1 billion, markets itself as a “visibility management” SaaS platform supporting SEO, advertising, content, and social media analytics. The company did not respond to requests for comment.
Allegations of Fiduciary Breach and Board Complicity
Mody’s complaint accuses Shchegolev, the board, and key executives of breaching fiduciary duty both directly and derivatively. Four directors, including Shchegolev, reportedly hold Class B shares with 10 votes per share — voting power that was protected by a delayed conversion to ordinary shares under the repurchase plan.
The suit claims the board “misused Semrush’s corporate treasury to facilitate Shchegolev’s gratuitous reacquisition of control,” amounting to an insider-driven takeover masked as a corporate buyback.
While Semrush had previously “down-converted” some Class B shares in sales worth $30 million, Mody argues the new buyback sidesteps market fairness and independent review.