Must Board Meeting Notices Be Ingenuous?
Yesterday's post briefly discussed former Chancellor William Chandler's ruling in Fogel v. U.S. Energy Systems, Inc., 2007 Del. Ch. LEXIS 178. In finding that no valid board meeting had occurred, Chancellor Chandler stated "when a director is tricked or deceived about the true purpose of a board meeting, and where that director subsequently does not participate in that meeting, any action purportedly taken there is invalid and void" (citing Koch v. Stearn, 1992 Del. Ch. LEXIS 163 which was later vacated for mootness under the Rule of Vacatur, Stearn v. Koch, 628 A.2d 44 (1992). I will leave the question of whether Chancellor Chandler is correct with respect to Delaware law, but note that Vice Chancellor Parsons expressed his disagreement in OptimisCare v. Waite, 2015 Del. Ch. LEXIS 222.
As far as California is concerned, no published California opinion cites Fogel. However, Section 307(a)(3) appears to reject Fogel by providing that "A notice, or waiver of notice, need not specify the purpose of any regular or special meeting of the board". However, directors who resort to chicanery to lure another director to a meeting arguably breach their statutory obligation to perform their duties in good faith. Cal. Corp. Code § 309(a).