Vice Chancellor Donald F. Parsons Jr. recently held in Genelux v. Roeder (In re Genelux), C.A. No. 10042-VCP (Del. Ch. Oct. 22, 2015), that Section 205 of the Delaware General Corporation Law, 8 Del. C. Section 205, does not permit a corporation to petition the Delaware Court of Chancery to declare invalid any corporate act or stock. It is instructive to see how Parsons reached this conclusion, a self-described “exercise of statutory interpretation.”

Section 205, which was enacted and became effective in 2014, conferred on the Court of Chancery exclusive jurisdiction to hear a petition brought by a corporation or other enumerated party to “determine the validity of” or to “ratify” a corporate act or stock that, but for the statute, would otherwise be considered defective or incurable. The enumerated parties besides a corporation include any successor entity to the corporation, member of the board of directors, record or beneficial holder of valid stock or putative stock, record or beneficial holder of valid or putative stock as of the time of a defective corporate act ratified pursuant to Section 204, or other person claiming to be substantially and adversely affected by a ratification pursuant to Section 204. Section 204 defines a “defective corporate act” as “an overissue, an election or appointment of directors that is void or voidable due to a failure of authorization, or any act or transaction purportedly taken by or on behalf of the corporation that is, and at the time such act or transaction was purportedly taken would have been, within the power of a corporation … but is void or voidable due to a failure of authorization.”

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