Practice Points for Delaware Companies with Non-Classified Boards After Chancery Court’s <em>Vaalco Energy </em>Decision

Practice Points for Delaware Companies with Non-Classified Boards After Chancery Court’s Vaalco Energy Decision


By: Abigail Pickering Bomba, Steven Epstein, Arthur Fleischer, Jr., Peter S. Golden, David J. Greenwald, Brian T. Mangino, Philip Richter, Robert C. Schwenkel, Gail Weinstein

Numerous Delaware companies that have declassified their boards in recent years (i.e., that have eliminated staggered terms of directors to provide for annual election of directors) did not, at the time of declassification, make any change to the director removal provisions in their charters and bylaws. Thus, many of these companies have non-classified directors and charter or bylaw provisions that permit removal of directors only for cause.

In a recent ruling, Vaalco Energy (Dec. 21, 2015), the Delaware Chancery Court held that non-classified directors can be removed without cause—irrespective of provisions in the charter or bylaws that purport to permit removal of directors only for cause. In the attached Fried Frank M&A Briefing, we discuss practice points arising from Vaalco for companies with non-classified boards, including considerations with respect to amendment of, and disclosure relating to, existing director removal provisions.

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