Background
Gregory Freiberg joined Xonar Technology Inc. as an executive and later became a director. After his relationships with the company’s founders deteriorated, several stockholders executed written consents on January 5, 2026, purporting to remove him from the board. Freiberg brought a summary action under Section 225 of the Delaware General Corporation Law, alleging that inaccuracies in Xonar’s capitalization table meant the January 5 signatories lacked the required voting majority.
After the lawsuit began, Xonar obtained additional written consents from stockholders Brian and Jeff McFadden on January 27. Xonar also stipulated, solely for purposes of the case, to Freiberg’s positions concerning certain preferred shares, a disputed stock conversion, and his claimed equity ownership. Those stipulations narrowed the trial to whether the McFadden consents could be counted and how Freiberg’s share ownership should be calculated. Freiberg conceded that he had to prevail on both issues to obtain relief.
The Court’s Holding
The Court of Chancery entered judgment for Xonar, holding that Freiberg failed to prove that the McFadden consents should be excluded. Section 228 permits stockholder action through multiple written consents executed and delivered on different dates within a 60-day period. The January 5 consents therefore did not become invalid merely because they were insufficient when first delivered; instead, the removal became effective when sufficient consents had been delivered, no later than January 27.
The court rejected Freiberg’s arguments that Xonar had effectively “closed” the consent process on January 5, that the McFadden consents impermissibly operated retroactively, and that fiduciary misconduct tainted their solicitation. The McFadden consents contained no completed retroactive effective date, and Freiberg did not prove a material misstatement, material omission, or improper inducement. Because Freiberg had to win both triable issues and lost on the consent issue, the court did not decide the proper calculation of his share ownership.
The court also refused to vacate its protective order or reopen discovery. Xonar’s stipulations accepted Freiberg’s capitalization allegations for purposes of the proceeding, making further discovery into those matters unnecessary in the expedited Section 225 action. The court denied Xonar’s request for fee shifting because Freiberg’s litigation conduct, although burdensome, did not rise to bad faith.
Key Takeaways
- Written consents supporting the same corporate action may be aggregated when delivered within Section 228’s 60-day period.
- If the initially delivered consents are insufficient, the corporate action becomes effective when the corporation receives the consent that completes the required majority.
- A party seeking to invalidate stockholder consents on equitable grounds bears a heavy burden to prove a material disclosure violation or other misconduct that tainted the consent process.
Why It Matters
The decision clarifies that stockholder action by written consent does not function like a meeting that automatically “closes” once a corporation announces the result or attempts to implement the action. A corporation may obtain additional consents within the statutory window, although the action is effective only when sufficient consents have actually been delivered.
The opinion also reinforces the narrow, expedited nature of Section 225 proceedings. Broader disputes over compensation, fiduciary duties, or related corporate conduct generally will not expand a proceeding whose immediate purpose is to determine whether a director validly holds office.