Bigler, C. Stephen and Tillman, Seth Barrett (2010) Void or Voidable? — Curing Defects in Stock Issuances Under Delaware Law. In: Acquisitions and Mergers: Negotiated and Contested Transactions. Clark Boardman Callaghan, Deerfield, IL, pp. 1109-1151. ISBN 9780876324622
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Abstract
It is not unusual for a Delaware corporation’s stock records to have omissions or procedural
defects raising questions as to the valid authorization of some of the outstanding stock.
Confronted with such irregularities, most corporate lawyers would likely attempt to cure
the defect through board and, if necessary, stockholder ratification. However, in a number
of leading cases, the Delaware Supreme Court has treated the statutory formalities for the
issuance of stock as substantive prerequisites to the validity of the stock being issued, and
the court has determined that failure to comply with such formalities renders the stock in
question void, i.e., not curable by ratification. Unfortunately, the decisions issued by the
Delaware courts have not afforded the necessary certainty to allow practitioners to decide
whether a particular defect in stock issuance is a substantive defect that renders stock void
or a mere technical defect that renders stock voidable. This Article analyzes the cases giving
rise to this lack of clarity and proposes that the Delaware courts apply the policy underlying
Article 8 of the Delaware Uniform Commercial Code to validate stock in the hands of innocent
purchasers for value in determining whether stock is void or voidable.
Item Type: | Book Section |
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Additional Information: | Postprint version of article published in Bigler, C Stephen & Tillman, Seth Barrett (2010) 'Void or Voidable? -- Curing Defects in Stock Issuances Under Delaware Law'. Bryan, Joy Marlene & Lorne, Simon M, Acquisitions and Mergers: Negotiated and Contested Transactions |
Keywords: | Void; Voidable; Stock Issuances; Delaware; Law; Delaware Uniform Commercial Code; ratification; |
Academic Unit: | Faculty of Social Sciences > Law |
Item ID: | 5200 |
Depositing User: | Seth Tillman |
Date Deposited: | 22 Jul 2014 15:39 |
Publisher: | Clark Boardman Callaghan |
Refereed: | Yes |
URI: | https://mural.maynoothuniversity.ie/id/eprint/5200 |
Use Licence: | This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here |
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