Richards Layton & Finger
 

Court of Chancery Addresses Validity of Entity Action

October 24, 2012

In Feeley v. NHAOCG, C.A. No. 7304-VCL (Del. Ch. Oct. 12, 2012), the Delaware Court of Chancery addressed several important issues regarding the validity of actions taken in violation of a Delaware limited liability company's operating agreement. The court also indicated that, in certain instances, otherwise unauthorized acts may be ratified by a course of conduct or a later grant of authority. Finally, the court provided significant guidance on the application of Section 144 of the Delaware General Corporation Law, confirming that the common law rules displaced by that statute are inapplicable to Delaware limited liability companies, despite the absence of an analog in the Delaware Limited Liability Company Act.