Section 223 of the Delaware General Corporation Law (the “DGCL”) provides an invaluable remedy to stockholders when there are no directors in office, or when, due to vacancies or newly created directorships, the directors in office constitute less than a majority of the board.
Under Section 223(a) of the DGCL, when there are no directors in office, any officer or stockholder (of fiduciary of a stockholder) “may apply to the Court of Chancery for a decree summarily ordering an election as provided in § 211 or § 215 of this title.”
In addition, under Section 223(c) of the DGCL, if, due to vacancies or newly created directorships, the directors in office constitute less than a majority of the whole board, any stockholder holding at least 10% of the voting stock may apply to the Court of Chancery to “summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by § 211 or § 215 of this title as far as applicable.”
Subsequent posts will address Section 223 election actions in greater detail.
Carl D. Neff is a lawyer with the law firm of Fox Rothschild LLP. Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at firstname.lastname@example.org.