Chancery Resolves Section 225 Dispute and Declines to Invalidate Written Consents

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Zhou v. Deng, C.A. No. 2021-0026-JRS (Del. Ch. Apr. 6, 2022)

When deciding a summary proceeding regarding a disputed corporate office under Section 225 of the DGCL, the Court of Chancery may consider whether an election, appointment, or removal was tainted by fraud, deceit, or breach of contract.  This decision involves the Court considering such defenses to the defendants’ removal and replacement as directors.  Here, the Court declined to invalidate the challenged written consents based on allegations of breaches of fiduciary duty, breaches of contract, and fraud.  The Court, for instance, rejected the breach of contract defense concerning stock purchases because the breach was already remedied in another action by an award of damages and the sale contract had not been rescinded.

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