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Chancery Court Finds Notice to Non-Consenting Stockholders Not a Precondition to an Effective Majority Written Consent

Posted by on Wednesday, January 15, 2020 in Delaware Corporate Law Bulletins, En Banc.

Robert S. Reder & Jake Haskins | 73 Vand. L. Rev. En Banc. 53 |

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“[N]otice issues were addressed by the Delaware Court of Chancery (“Chancery Court”) in Brown v. Kellar, C.A. No. 2018-0687-MTZ, 2018 WL 6721263 (Del. Ch. Dec. 21, 2018). First, Vice Chancellor Morgan T. Zurn considered whether “prompt notice” under DGCL § 228(e) is a condition precedent to an effective written consent or simply a subsequent obligation. Based on the statute’s plain language, the Vice Chancellor ruled notice is not a condition precedent—that is, absent “unique circumstances.” Second, the Vice Chancellor opined that a corporation’s failure to deliver an effective SEC Rule 14c-2 information statement to stockholders does not delay effectiveness of an otherwise valid DGCL § 228 stockholder consent.”

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