In re VAALCO Energy Shareholder Litigation
Delaware Court of Chancery
CA No. 11775-VCL (2015)
VAALCO Energy, Inc. had a classified board of directors. The company’s charter and bylaws stated that directors could be removed only for cause. In 2009, VAALCO amended the structure of its board elections, declassifying the board so that the entire board was up for election at the same time. The board was elected by straight voting. A group of shareholders (Group 42) (plaintiff) announced that it planned to remove VAALCO’s directors at a special shareholders’ meeting. The announcement stated that the shareholders could do this in spite of the charter and bylaws, based on section 141(k) of the Delaware General Corporation Law. Section 141(k) gave shareholders the right to remove any director, with two exceptions: a corporation with a classified board, and a board elected via cumulative voting. VAALCO asserted that the charter and bylaws controlled and that the directors could not be removed without cause. Group 42 brought suit.
Rule of Law
Holding and Reasoning ()
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