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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
Morris James Blogs
Court Of Chancery Invalidates Stock Issuance
This is an example of a corporate nightmare for failing to follow the requirements to validly issue stock. Delaware law requires that the stock issuance be reflected by a "written instrument," not just some oral agreement. Moreover, the Court of Chancery will not use its equitable powers to cure a void stock issuance. Hence, the stock will be held to not exist and all the corporate acts taken in reliance of that stock being issued will be called into question.