Court of Chancery Clarifies 8 Del. C. § 205

chancerysealOn October 22, 2015, Vice Chancellor Parsons clarified application of 8 Del. C. § 205, looking to the intent of the legislature. In In re Genelux Corp., (Del. Ch. 10042-VCP) (Opinion Oct. 22, 2015), V.C. Parsons held that 8 Del. C. § 205 did not give the Court authority to invalidate prior acts of the company, but instead afforded an opportunity for the validation and ratification of corporate acts that may have been defective at the time of implementation. The Court utilized the following factors in reaching its decision: (1) whether the corporation believed the act was valid, (2) whether the corporation treated the act as valid, (3) whether validating the act would cause harm that the act originally would not have caused, and (4) whether failing to validate the act would cause harm.

The Court’s Opinion can be read in full here.

Greg Fischer

 

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