Richards Layton & Finger

Delaware Court of Chancery Validates Defective Acts and Clarifies Limited Scope of Dually Direct and Derivative Claims

September 2018

In Almond v. Glenhill Advisors LLC, the Delaware Court of Chancery provided significant guidance regarding the circumstances under which it would use its equitable powers under Section 205 of the Delaware General Corporation Law (DGCL) to validate acts that, due to technical failures in authorization, would be void or voidable (and thus potentially give rise to claims for rescission or rescissory or other damages). The Court also provided further clarity to the narrow circumstances under which claims for breach of fiduciary duty involving allegations of overpayment could be brought both directly and derivatively.