Executive Summary
Delaware law does not prohibit Fortune 500 companies from adopting mandatory arbitration clauses for federal securities claims in their corporate bylaws, and the SEC removed the final federal obstacle in September 2025. Every Delaware-incorporated public company can now act on a bylaw amendment that could eliminate class-action securities litigation entirely. Boards that do not evaluate this posture before the next proxy season leave a material litigation cost exposure unaddressed.
The Signal at a Glance
Delaware's DGCL Section 115(c) does not bar mandatory arbitration of federal securities claims; Freshfields analysis published May 13, 2026, in the Harvard Law School Forum on Corporate Governance establishes the statutory argument that clears the path for widespread Fortune 500 bylaw adoption.
The Deep Dive
The Signal
The conventional wisdom was wrong. After the SEC voted in September 2025 to remove its longstanding restrictions on mandatory arbitration clauses for securities claims, the question shifted to Delaware: does DGCL Section 115(c), enacted August 1, 2025, prohibit such clauses?
The answer, according to a Freshfields US LLP analysis published May 13, 2026, in the Harvard Law School Forum on Corporate Governance, is no. Section 115(c) limits charter and bylaw provisions binding stockholders "acting in their capacity as stockholders." Federal securities claims do not require the plaintiff to be a current stockholder. The statute does not mention arbitration. Nothing in Delaware law prohibits the adoption of mandatory arbitration clauses for direct federal securities claims.
The Evidence
DGCL Section 115(c) was enacted June 25, 2025, signed by Governor Matt Meyer June 30, 2025, and took effect August 1, 2025. The statute's text addresses claims brought by stockholders acting in their capacity as stockholders. Private federal securities claims under the Securities Act and Exchange Act do not require current stock ownership. The statutory carveout simply does not reach those claims.
The SEC removed its federal restrictions at an open meeting on September 17, 2025. SEC Chairman Paul Atkins stated at that meeting that he expected "many people will express views on whether a company should adopt a mandatory arbitration provision." Only one company, Zion Oil and Gas (a Texas corporation), had adopted such a clause as of the Freshfields analysis date. SpaceX, also a Texas corporation, is reported to plan adoption upon going public.
The low adoption rate among Delaware companies reflects the misreading of Section 115(c) as a prohibition. The Freshfields statutory analysis identifies five independent grounds under which that reading fails: the statute's plain text, textualist construction, structural coherence with other DGCL sections (particularly Section 122(18)), Delaware's public policy favoring contractual freedom, and federal preemption under the Federal Arbitration Act. Any one of those grounds is sufficient. Together they are conclusive.
The Strategic Implication
Defensive Risk. General counsel and audit committee chairs at Delaware-incorporated Fortune 500 companies that have not reviewed this issue face a process gap, not a substantive one. The governance failure would not be adopting arbitration; it would be reaching the next annual meeting cycle without a documented board-level evaluation. Class-action securities litigation is a material financial exposure; the D&O insurer, the audit committee chair, and the nominating and governance committee chair each have a documented interest in whether the board considered this option and why it reached the conclusion it did. Boards that cannot show that analysis before the 2026-2027 annual meeting season will have difficulty explaining the omission to institutional investors and proxy advisors who ask whether the board reviewed all available means of protecting shareholder value. Commission the analysis from external Delaware counsel before the June 30 board governance calendar deadline.
Offensive Advantage. The first Delaware-incorporated company to adopt a mandatory arbitration bylaw with rigorous stockholder disclosure sets a governance precedent that competitors will reference for years. The litigation cost reduction is direct: class-action securities suits are settled in the shadow of jury trial costs, not on the merits. Removing that dynamic shifts the entire settlement calculus. Boards that move before the posture becomes crowded retain the institutional narrative advantage. Commission the bylaw analysis before the June 30 board governance calendar deadline, disclose the evaluation process to institutional investors ahead of proxy season, and frame adoption as a fiduciary judgment on litigation cost management, not a defense of management from accountability.
The board that requires a documented evaluation of every available fiduciary tool is the board that avoids the question of why it did not.