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Delaware Chancery Court Confirms Right of Stockholders to Remove Directors Without Cause in the Recent In re Vaalco Ruling

This blog post discusses the recent In re Vaalco case where the Delaware Chancery Court confirmed that, subject to certain enumerated exceptions, Section 141(k) of the Delaware General Corporation Law provides stockholders with the right to remove directors with or without cause despite contradictory language in a corporation's charter. The ruling may directly impact several companies with similar language in their governing documents and provides further clarity on this important issue for stockholders who may wish to effect change between annual meetings.

In a recent decision by the Delaware Court of Chancery in In re Vaalco Energy S’holder Litig., Vice Chancellor Laster made clear that, subject to certain exceptions, corporations cannot restrict the right of stockholders to remove directors without cause under Section 141(k) of the Delaware General Corporation Law (“Section 141(k)”) by maintaining restrictive language in their charters and bylaws. This ruling confirms the traditional interpretation that Section 141(k) provides stockholders with an absolute right to remove directors, unless a company has cumulative voting in the election of directors or a classified board, and provides clear guidance for corporations and stockholders who may be interested in seeking change.  The firm's full Client Alert can be found here.