6 Analyses of this case by attorneys

  1. Curing Corporate Missteps Under Delaware Corporate Law

    Fox Rothschild LLPMax CantorAugust 19, 2017

    [i]A “defective corporate act” includes any corporate act or transaction that was within the power granted to a corporation by the DGCL but was thereafter determined to have been void or voidable for failure to comply with the applicable provisions of the DGCL, the corporation’s governing documents, or any plan or agreement to which the corporation is a party. See 8 Del. C. § 204(h)(1); See also, e.g., Blades v. Wisehart, C.A. No. 5317-VCS, at 8 (Del. Ch. Nov. 17, 2010) (holding that “scrupulous adherence to statutory formalities when a board takes actions changing a corporation’s capital structure”); STAAR Surgical Co. v. Waggoner, 588 A.2d 1130, 1136 (Del. 1991) (“Stock issued without authority of law is void and a nullity.”).

  2. "Sections 204 and 205 of Delaware Corporation Law: Effective Tools to Remedy Defective Corporate Acts"

    Skadden, Arps, Slate, Meagher & Flom LLPJenness ParkerMay 9, 2017

    In sum, Sections 204 and 205 have the potential to be effective tools that corporations and their counsel may employ in appropriate situations to remedy defective corporate acts or provide clarity on issues that, while not necessarily defective, may be causing corporate uncertainty. ______________1See, e.g., Blades v. Wisehart, C.A. No. 5317-VCS, 2010 WL 4638603, at *8 (Del. Ch. Nov. 17, 2010) (requiring “scrupulous adherence to statutory formalities when a board takes actions changing a corporation’s capital structure”); STAAR Surgical Co. v. Waggoner, 588 A.2d 1130, 1136 (Del. 1991) (“Stock issued without authority of law is void and a nullity.”).2In re Numoda Corp. S’holders Litig., Consol.

  3. Amendments to Delaware General Corporation Law Allow Delaware Corporations to Ratify Defective Corporate Acts

    McCarter & English, LLPPhilip AmoaApril 7, 2014

    After that time, a defective corporate act ratified pursuant to Section 204 may not be invalidated or subject to the imposition of conditions in an action under Section 205.1See, e.g., STAAR Surgical Co. v. Waggoner, 588 A.2d 1130 (Del. 1991) and Blades v. Wisehart, 2010 WL 4638603 (Del. Ch. Nov. 17, 2010).2 See 8 Del. C. § 204(f).

  4. 2013 Changes to Delaware Corporate and LLC Law

    Akin Gump Strauss Hauer & Feld LLPDecember 20, 2013

    Previous case law had held that corporate transactions that were void or voidable because of their failure to comply with the corporation’s organizational documents or statutory law could not subsequently be ratified. See, e.g., STAAR Surgical Co. v. Waggoner, 588 A.2d 1130 (Del. 1991) and Blades v. Wisehart, 2010 WL 4638603 (Del. Ch. Nov. 17, 2010). For instance, if a corporation issued more shares than authorized by its charter, it could not ratify that issuance subsequently but would instead be required to amend its organizational documents to permit the issuance and then re-issue the shares.

  5. Validating the Voidable: A Guide to the New Procedures to Ratify Defective Corporate Acts Under Delaware Law

    Epstein Becker & Green, P.C.September 10, 2013

    Methods for doing so include board ratification and shareholder ratification (i.e., a fully informed vote by the board and/or stockholders, as applicable, approving an action that does not legally require board and/or stockholder approval as a prerequisite to effectiveness).[7]See, e.g., STAAR Surgical Co. v. Waggoner, 588 A.2d 1130, 1136 (Del. 1991) (finding that "[s]tock issued without authority of law is void and a nullity."); Blades v. Wisehart, 2010 WL 4638603 (Del. Ch. Nov. 17, 2010) (holding that because a stock split failed to adhere to the required corporate formalities, both the stock split and certain subsequent stock transfers purportedly effected by the company were invalid and void).

  6. 2013 Proposed Amendments To Delaware General Corporation Law

    Pepper Hamilton LLPMarch 26, 2013

    The proposed amendments clarify that the board may determine that consideration by utilizing a pre-approved formula, which could be useful in predetermining the consideration for stock and may utilize factors such as market price of the company’s stock over some period of time.Ratification of Defective Corporate Acts - Proposed Sections 204 and 205 The proposed legislation adds two new sections to the DGCL to provide corporations a means of ratifying corporate acts that initially may not have been properly authorized. The proposed amendments are intended to overturn cases such as STAAR Surgical Co. v. Waggoner, 588 A.2d 1130 (Del. 1991) and Blades v. Wisehart, 2010 WL 4638603 (Del. Ch. Nov. 17, 2010), which forbid validation of corporate acts, by ratification or on equitable grounds, that are void because of a failure to comply with the DGCL or the corporation’s organizational documents. Proposed Section 204 provides a safe-harbor procedure for corporations to ratify corporate action that could be challenged as void or voidable because the authorization of that action did not comply with the DGCL, corporate organizational documents, or other corporate agreements.