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Delaware Chancery Counts Stockholder Consents Obtained Post-Litigation in Majority Vote Removing Director
09/29/2026On September 15, 2026, Chancellor Kathaleen McCormick entered post-trial judgment for defendant after a summary proceeding under Section 225 of the Delaware General Corporation Law (the “DGCL”), which governs proceedings for contested board seats, challenging plaintiff’s removal from the board of directors of a private security technology company. Freiberg v. Xonar Tech. Inc., C.A. No. 2026-0093-KSJM (Del. Ch. Sept. 15, 2026). The Court held that plaintiff failed to prove that he was improperly removed without majority stockholder consent, finding that written consents received after the suit was filed could be counted.
On January 5, 2026, certain of the company’s stockholders executed written consents removing plaintiff as a director (the “January 5 Consents”). Plaintiff brought expedited litigation, arguing that the January 5 Consents were ineffective because the calculation methodology for majority share ownership was inaccurate. The signing stockholders then obtained written consents from two of the company’s significant stockholders on January 27, 2026 (the “McFadden Consents”). The company later stipulated to plaintiff’s allegations concerning the capitalization table for purposes of this action only. The Court narrowed the case to two triable issues: whether the Court could count the McFadden Consents toward plaintiff’s removal, and what methodology governed the calculation of plaintiff’s share ownership. It reached only the first.
The Court held that the McFadden Consents could be aggregated with the January 5 Consents, rejecting plaintiff’s theory that the company “necessarily ‘closed’ the consent period by treating Plaintiff’s removal as effective on January 5,” such that the McFadden Consents must be disregarded. The Court explained that stockholder action under Section 228 of the DGCL, which permits stockholders to act by written consent, may be accomplished by multiple consents, which need not be signed on the same date so long as they are delivered within 60 days of delivery of the first. The McFadden Consents fell within that window, and the company had given prompt notice to non-consenting stockholders, as Section 228(e) requires. The Court found that “the consent period is not ‘closed’ until the earlier of 60 days or the delivery of the requisite number of consents.” Any failure to aggregate a majority on January 5 therefore merely rendered the removal ineffective until the company received the McFadden Consents.
The Court also disagreed that the McFadden Consents were backdated, finding that they specified no effective date, and declined to set the consents aside on equitable grounds, holding that plaintiff failed to meet his burden to identify material omissions and materially false statements.
M&A and Corporate Governance