After a Delaware corporation issued a proxy statement and told the stockholders that an amendment to increase its authorized shares of common stock required only a majority-of-the votes-cast, a plaintiff stockholder sought to enjoin the company from proceeding on the ground that the amendment required a majority-of-the-outstanding-shares-entitled-to-vote. The only issue was the voting standard. The relevant charter provision provided that “The number of authorized shares of Common Stock . . . may be increased . . . by the affirmative vote of the holders of a majority of the voting power of all of the outstanding shares of stock of the Company entitled to vote thereon” (the “Single Vote Provision”). Defendants argued that the 2023 statutory amendment to Section 242(d)(2)(B) of the Delaware General Corporation law (“DGCL”) imposes the majority-of-the-votes-cast standard, and that under Section 242(d)(2), the Single Vote Provision of the charter only functions to eliminate the need for a class vote under Section 242(d)(2)(C). Conversely, the plaintiff argued that the Single Vote Provision of the charter does what DGCL Section 242(d) permits by opting out of the majority-of-the-votes-cast standard in favor of the majority-of-the-outstanding-shares-entitled-to-vote standard. After reviewing the charter’s language and the legislative history, the Court ruled that the proxy statement correctly described the vote requirement because the “extrinsic evidence either points in favor of the defendants’ interpretation or is inconclusive.” However, the Court cautioned that the outcome may differ where a similar single vote charter provision was adopted after the 2023 amendments or did not closely track the class vote opt-out of DGCL Section 242(d)(2)(C).
