Henry v. Phixios Holdings, Inc.
Delaware Court of Chancery
2017 WL 2928034 (Del. Ch. July. 10, 2017)
Phixios Holdings, Inc. (defendant) adopted a stock-transfer restriction in a stockholder agreement, permitting a majority of stockholders to revoke a stockholder’s stock if they found that the stockholder acted in ways damaging to the corporation. Jon Henry (plaintiff) was a Phixios stockholder. The above restriction was not noted on his stock certificate, and Henry did not have knowledge of the restriction before he bought the stock. Henry later became aware of the restriction but never agreed to be bound by it. In response to allegations that Henry tried to compete with Phixios, the company rescinded his stock in accordance with the stock-transfer restriction. Henry sought access to company books and records. Phixios denied him access, claiming that he was no longer a stockholder. Henry sued the company, seeking a declaration that the restriction did not apply to him and that he was a still a stockholder.
Rule of Law
Holding and Reasoning (Montgomery-Reeves, J.)
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