June 27, 2022

Volume XII, Number 178

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June 27, 2022

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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).

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 40
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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