STAAR Surgical Company v. Waggoner
Delaware Supreme Court
588 A.2d 1130 (1991)
- Written by Heather Whittemore, JD
Facts
STAAR Surgical Company (STAAR) (defendant) issued convertible preferred stock to its former president, Thomas R. Waggoner, and his wife, Patricia (plaintiffs). When STAAR issued the convertible preferred stock, it failed to formally adopt a board resolution or file a certificate of designation as required by Delaware state law. The Waggoners converted one share of the preferred stock to common stock. After a dispute between STAAR and Thomas, the Waggoners filed a lawsuit in Delaware Chancery Court to compel STAAR to hold a shareholders meeting. STAAR opposed the action, arguing that the Waggoners’ common stock was invalid because it was acquired through the conversion of invalid preferred stock. The chancery court found that the preferred stock was invalid because it was not issued pursuant to Delaware state law. Despite the preferred stock being invalid, the chancery court held that the Waggoners were equitably entitled to the common stock. STAAR appealed.
Rule of Law
Issue
Holding and Reasoning (Moore, J.)
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