Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
Sept. 1 — The Delaware Chancery Court Aug. 31 determined that it was proper to grant judgment on a petition seeking to validate putative stocks of CertiSign Holding Inc. while other questions related to the company's capital structure remained unresolved.
CertiSign and one of its original directors had filed the petition pursuant to §205 of the Delaware General Corporation Law, which authorizes the court to validate corporate acts that would be void or voidable.
In granting CertiSign's motion for partial judgment on the pleadings, Vice Chancellor John W. Noble concluded that the court could resolve the issue before addressing a counter-petition related to other purported components of the company's capital structure.
However, the court declined the petitioners' request to enter a final order pursuant to Court of Chancery Rule 54(b). “Petitioners have failed to establish a sufficient danger of hardship or injustice to justify entry of a final order on the Petition,” Noble wrote.
CertiSign filed its petition seeking an order validating stock issuances and approving a corresponding stock ledger. Noble observed that the petition “appears tailor-made for Section 205 relief” because the company operated for years under the assumption that it was validly capitalized, there was agreement that the predicament arose from a ministerial error and all record stockholders consented to the relief requested in the petition.
Despite agreeing that the stock issuances should ultimately be ratified, a former officer and director—who filed a counter-petition seeking judicial validation of other alleged corporate acts—opposed the court granting CertiSign's requested relief before resolving the company's full capital structure.
In rejecting an argument that it would be inequitable to grant the petitioners' motion for partial summary judgment on the pleadings, Noble reasoned that “[Counter-petitioner] has not identified any persuasive reason why the Petition should not be granted now; indeed, he accepts that Petitioners will ultimately obtain the relief they seek. Therefore, judgment on the Petition’s sole count is warranted in Petitioners’ favor.”
The court, however, declined to enter a Rule 54(b) partial final judgment, finding that this was not a case where a party might benefit from an immediate appeal.
“Rather, Petitioners want the finality that could be achieved by the expiration of the period for an appeal,” he wrote. “There is no serious doubt or disagreement that the relief sought by the Petition will ultimately be granted; only the circumstances and conditions surrounding the final entry of a judgment are unsettled. Petitioners have not adequately explained the injustice they would suffer by the Court’s entry of a partial judgment in their favor but without Rule 54(b) finality.”
To contact the reporter on this story: Michael Greene in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Yin Wilczek at email@example.com
The opinion is available at http://www.bloomberglaw.com/public/document/IN_RE_CERTISIGN_HOLDING_INC_No_9989VCN_2015_BL_281328_Del_Ch_Aug_.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)