These new decisions highlight several key themes. First, the terms and organization of shareholder agreements can be critical and should be treated with care. In the Schröder decision, the importance that common shareholders wanted to give shareholder approval ran counter to the limits of Delaware corporate law with respect to the removal of CEOs. In the Southpaw decision, the company breached the explicit terms of the shareholders` agreement, resulting in zero share issues in light of the language of the agreement and the arguments presented in court. We expect that the concrete lessons of these cases will emerge in practice. In addition, the decisions, which correspond to many previous Delaware cases, show that technical requirements and considerations are very often tested in disputes concerning control of the company. That`s why it`s important to treat shareholder contracts and other similar topics carefully at the beginning. The majority shareholders tried to remove and replace the CEO, both as a director and director. In the resulting dispute, Vice-Chancellor Laster found, following a request for a decision on the pleadings, that the defendant`s conception was incompatible with Section 142(b) of Section 142(b) of the DGCL, which stipulates that senior managers are to be chosen in accordance with the Articles of Association or by actions of the Board of Directors, and the articles of association of the corporation under which the board of directors appointed senior officers each year after the annual general meeting of shareholders. and could remove agents for no reason. While the provision allowed shareholders to appoint or terminate the CEO, it did not usurp the authority of the board of directors. This case arose from a dispute over the control of the company`s board of directors, also brought under Article 225 of the DGCL. Prior to the dispute, a group of shareholders holding 48.8% of the company acquired additional shares in a secondary transaction, thereby taking a majority stake.

Immediately thereafter, the Board of Directors, which had temporarily considered adopting a new employee share ownership plan in the previous months, adopted a plan and issued enough limited shares to bring the shareholder back under a majority stake. The minutes reflected that the board of directors had expressed concerns about whether the watered-down shareholder would attempt to change the composition of the board of directors. The watered-down shareholder asserted that the diluent incremental issuances were not valid and ultimately attempted, in an appeal with written consent, to withdraw and replace a majority of the board of directors. The company challenged this attempt in court and another group of shareholders, who represented the so-called “new” majority of shares – friendly to the previous board of directors – attempted to relocate the former directors. 6. Carefully consider the triggers of a buy-sell agreement to ensure that they clearly address the parties` concerns. Badii v. Metropolitan Hospice, Inc., C.A. .

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