Reinforcing Absolute Shareholder Right To Remove Directors

Law360, New York (January 20, 2016, 10:42 AM EST) -- Steve Wolosky

Aneliya Crawford

Timothy Knox In a recent decision by the Delaware Court of Chancery in In re Vaalco Energy Shareholder Litigation, Vice Chancellor J. Travis Laster made clear that, subject to certain exceptions, corporations cannot restrict the right of stockholders to remove directors without cause under Section 141(k) of the Delaware General Corporation Law by maintaining restrictive language in their charters and bylaws. This ruling confirms the traditional interpretation that Section 141(k) provides stockholders with an absolute right to remove directors, unless a company has cumulative voting in the election of directors or a classified board, and provides clear guidance for...

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