On May 19, in Pell v. Kill, C.A. No. 12251-VCL, the Delaware Court of Chancery preliminarily enjoined certain directors of Cogentix Medical Inc. from completing a board reduction plan, under which such directors sought to reduce the size of the board from eight to five members. The court enjoined the board reduction plan, which was proposed to stave off a threatened proxy contest, because it found that it inhibited stockholders’ ability to vote at an annual election and precluded stockholders from being able to establish a new board majority.
Background
Cogentix was formed by way of a merger between Vision-Sciences Inc. (VSI) and Uroplasty Inc. As such, Cogentix’s board was composed of three former directors of VSI, including plaintiff Lewis C. Pell (the VSI directors), and five former directors of Uroplasty, including defendant Robert C. Kill (the Uroplasty directors). Cogentix’s board was divided into three classes with three directors in Class I, three directors in Class II, and two directors in Class III. Class I was composed of two VSI directors (including Pell), and one Uroplasty director. The issue raised in this litigation revolved around an election of Class I directors that was to take place at the Cogentix annual meeting scheduled for May 20.
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