Delaware Business Litigation Report

Court Of Chancery Upholds Stockholder Consents

Kerbawy v. McDonnell , C.A. 10769-VCP (August 18, 2015)

Given the sanctity of the stockholder vote in Delaware law, it would be surprising if the Court of Chancery would ever reverse such a vote or the use of stockholder consents to take corporate action.

This decision upholding such consents sets out the various unique situations that might justify reversing the vote, but then refuses to do so. While one would expect, as this decision acknowledges, that misrepresentations might be one of those cases justifying a reversal, it is noteworthy that outsiders do not have a fiduciary duty to tell all the truth all the time in a contest for stockholder vote. In that sense they are more like our politicians.

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