Section 225 of the Delaware General Corporation Law is an important and powerful tool for any shareholder, director or officer seeking to challenge the results of an election of directors of a Delaware corporation, along with the appointment, removal or resignation of any director or officer.

From a procedural perspective, a party seeking such relief may submit a Section 225 petition to the Delaware Court of Chancery.  In such an action, the Delaware Court of Chancery may determine “the validity of any election, appointment, removal or resignation of any director or officer of any corporation, and the right of any person to hold or continue to hold such office.”  8 Del. C. § 225(a).

A section 225 action is what’s known as a “summary proceeding” in the Delaware Court of Chancery.  Summary proceedings are typically expedited by the Court, and depending on the circumstances of the case, a petitioner can expect a trial on the merits within several months, subject to Court availability.  All trials before the Court of Chancery are bench trials, and opening and closing statements are made through either pre-trial or post-trial submissions.

Further, the Court “may determine the person entitled thereto; and to that end make such order or decree in any such case as may be just and proper, with power to enforce the production of any books, papers and records of the corporation relating to the issue.” Id.  In addition, the Court may also determine the result of any vote of the stockholders upon matters other than the election of directors or officers.

Carl D. Neff is a partner with the law firm of Pierson Ferdinand LLP, and practices in Delaware. You can reach Carl at (302) 482-4244 or at carl.neff@pierferd.com.