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: Delaware Business Litigation ReportCourt Of Chancery Explains Charter Interpretation Rules
By Edward M. McNally
When a certificate of incorporation is ambiguous, the Court must decide what it means. This decision explains how a court will do that job.
At least in the case of a publicly traded corporation, the Court is less inclined to use parol evidence and more inclined to fall back on rules of construction. One such rule is that it is presumed that stockholders retain the power to decide matters that are usually reserved for stockholder decision. Hence, if a stockholder or the board claim unusual powers, they had better spell those out clearly or lose the dispute.
Full post as published by Delaware Business Litigation Report on January 31, 2011 (boomark / email).
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