A recurring tension in venture-backed companies is that the investor who funds the business often wants a seat at the board table, and once its designee takes that seat, he or she owes fiduciary duties to the company, not to the investor who put them there. A recent decision from the Court of Chancery shows what can happen when those two loyalties collide. In Zync, Inc. v. Porsche Investments Management, S.A., C.A. No. 2025-0284-JTL (Del. Ch. May 29, 2026), Vice Chancellor J. Travis Laster declined to dismiss breach-of-fiduciary-duty and aiding-and-abetting claims arising from the collapse of an automotive-technology startup, in an opinion that venture investors and their board designees should read carefully.

Background

The venture capital arm of a luxury automaker invested in Zync, Inc., an automotive-technology startup. Porsche funded $2.9 million through a convertible note and received common stock representing 5% of the company on a fully diluted basis. Two contracts defined the governance relationship. A voting rights agreement committed the company to a three-member board and gave Porsche the right to designate one director, Christian Knörle, for as long as Porsche held at least 2% of the common stock. An investor rights agreement gave the Porsche designee blocking rights over a list of specified corporate actions, meaning the company’s other two directors could not act on a covered matter without Knörle’s approval. Knörle was himself a Porsche employee who reported to a Porsche managing director.

According to the complaint, the relationship soured as the company’s cash needs grew. Porsche delayed advances it owed under the note. When the company lined up third-party venture financing that would have provided needed capital, Knörle blocked it. He floated a far smaller Porsche bridge loan and, in the course of those discussions, pressed the company’s CEO for a copy of its confidential draft contract with a competing automaker so he could forward it to his superior at Porsche. Porsche never provided meaningful additional funding. Starved of capital, the company became insolvent and shut down. Zync sued Knörle for breach of fiduciary duty and sued Porsche for aiding and abetting those breaches, tortiously interfering with the two financings, and breaching the implied covenant of good faith and fair dealing.

The Dual-Fiduciary Problem

Vice Chancellor Laster framed the core issue as the “dual fiduciary problem.” A director designated by an investor still owes the company and its stockholders an “uncompromising duty of loyalty,” and Delaware law has long recognized, from Weinberger through McMullin and Krasner, that a fiduciary who simultaneously serves a conflicted second master faces a heightened, not diminished, liability risk. There is no dilution of the duty of loyalty simply because a director wears two hats.

Applying that principle, the Court found the complaint adequately alleged that Knörle was a conflicted dual fiduciary who acted in bad faith. Blocking the company’s third-party financing while demanding confidential competitor information for Porsche’s benefit could not be reconciled with his duty of loyalty to the company. The Court also rejected the suggestion that a director must take formal board action to breach his duties; inaction in service of the conflicting loyalty can suffice.

Aiding and Abetting, Interference, the Implied Covenant, and Exculpation

Because the complaint stated a loyalty claim against Knörle, the aiding-and-abetting claim against Porsche followed. Such a claim requires a fiduciary relationship, a breach, knowing participation, and resulting damages. Allegations that Porsche instructed its designee to act in Porsche’s interests and against the company’s supplied the knowing-participation element, whose “substantial assistance” component the Court evaluated under the familiar Restatement five-factor framework.

The aiding-and-abetting discussion also delivers a doctrinal update worth flagging. Under the Supreme Court’s 2025 decision in Columbia Pipeline, an aider and abettor’s knowledge must now be actual rather than constructive, and Columbia Pipeline together with Mindbody requires a third-party acquirer to act affirmatively rather than stay silent. Vice Chancellor Laster declined to extend that affirmative-conduct requirement to an affiliate like Porsche, which stands on different footing from an arms’-length buyer, so the Restatement’s multi-factor substantial-assistance test still governs. Porsche did not sit silent; it told Knörle what to do.

The Court also sustained the intentional-interference claim: because Knörle breached his duty of loyalty, Porsche’s use of a contractual veto to block the financings supplied the “wrongful means” that a financially interested party must employ before its interference becomes actionable.

The Court likewise sustained an implied-covenant claim, observing that a party may not wield a discretionary contractual right to inflict harm on its counterparty unless the counterparty submits to its demands. Most instructive for transactional lawyers is the Court’s treatment of the contractual exculpation defense. Porsche pointed to a provision in the voting agreement purporting to eliminate liability connected to its designation of a director. Vice Chancellor Laster found the provision too poorly drafted to support dismissal; it admitted of two reasonable readings, and on a motion to dismiss the Court cannot choose between competing reasonable interpretations. Beyond that, the Court explained that even under Porsche’s preferred reading, the provision could not stand: Delaware’s settled common law forbids eliminating liability for intentional and bad-faith conduct, and a contractual term attempting to do so would be contrary to the law of this State.

Key Takeaways

Zync is a cautionary tale for investors who negotiate the right to place a designee on a portfolio company’s board. That designee becomes a full fiduciary of the company, and an investor that scripts its designee’s votes to advance its own agenda, particularly to the company’s detriment, exposes itself to aiding-and-abetting liability. Blocking rights and other negotiated governance protections are not licenses to manage the company for the investor’s benefit alone.

The decision is also a drafting lesson. Liability-limiting and exculpation provisions must be written with precision, and even a well-drafted one will not shield bad-faith conduct. As I previously discussed in “Moelis and its Aftermath,” Delaware now permits stockholders to allocate significant governance rights by agreement, including under Section 122(18) of the DGCL, but those agreements do not eliminate the fiduciary duties owed by directors, officers, and controlling stockholders. Zync shows where that line is enforced.