Effective August 1, 2022, Delaware amended Section 102(b)(7) of its General Corporation Law to allow a Delaware corporation to include in its certificate of incorporation a provision exculpating certain of its officers.  Notably and unlike the preexisting authority to exculpate directors, officers may not be exculpated in any action by or in the right of the corporation.  The Delaware legislature did not explain why it believed it had the authority to allow corporations to eliminate the personal liability of officers for monetary damages. 

The Delaware Supreme Court has described the certificate of incorporation as "a contract among shareholders".    Waggoner v. Laster,  581 A.2d 1127, 1134 (Del. 1990).  See also STAAR Surgical Co. v. Waggoner, 588 A. 2d 1130, 1136 (Del. 1991) ("The charter is also a contract among the shareholders themselves.") and Schultz v. Ginsburg, 965 A. 2d 661, 668 (Del. 2009) ("PHLX's Certificate of Incorporation is a contract between the stockholders and the corporation." (citing STAAR Surgical)).  The Supreme Court in STAAR Surgical also found that the certificate of incorporation is also a contract (i) between the state and the corporation; and (ii) the corporation and its stockholders. 

These cases do not hold, however, that the certificate is a contract between the stockholders and the officers.  If the certificate is not a contract between the officers and the shareholders, the inclusion of an exculpation clause cannot be understood as a contract on the part of the shareholders not to advance direct claims.  Similarly, an amendment of the certificate to exculpate officers in direct actions by stockholders cannot be explained as a contractual amendment.  If there is no contract, then there is nothing to amend.  

An exculpation provision might be explained in terms of the officers being third party beneficiaries of either the contract among the shareholders and/or the contract between the shareholders and the corporation.  However, this would require a court to conclude that the officers met the tripartite test for third party beneficiary status:

To adequately allege standing as a third-party beneficiary under Delaware law, Plaintiff must plead that (i) the contracting parties intended that the third-party beneficiary benefit from the contract, (ii) the benefit was intended as a gift or in satisfaction of a preexisting obligation to that person, and (iii) the intent to benefit the third party was a material part of the parties’ purpose in entering into the contract.