Chancery Court Voids Stock Issue in Board Fight
The Delaware Court of Chancery on Thursday ruled that a hurried stock issuance designed to stave off a takeover of the Roma Restaurant Holdings Inc. board was void and could not be counted in a vote to control the company.
February 02, 2018 at 06:38 PM
4 minute read
Tamika Montgomery-Reeves.
The Delaware Court of Chancery on Thursday ruled that a hurried stock issuance designed to stave off a takeover of the Roma Restaurant Holdings Inc. board was void and could not be counted in a vote to control the company.
According to court documents, the transaction came just as Southpaw Credit Opportunity Master Fund and another company stood poised to take a majority stake in the parent of Tony Roma's restaurant chain in late 2016. After hearing about Southpaw's plans, the Roma board quickly approved a new compensation plan to issue stock to 14 of the company's employees, effectively diluting Southpaw's holdings and preventing it from gaining control of the three-member board.
In a 24-page memorandum opinion, however, Vice Chancellor Tamika Montgomery-Reeves said the directors failed to obtain written agreements from the stock recipients joining them to Roma's shareholder agreement.
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