Nguyen v. View, Inc.: The Delaware Court of Chancery Holds that Acts Deliberately Rejected by Stockholders Are Not Subject to Ratification under Section 204 of the Delaware General Corporation Law
Since it became effective on April 1, 2014, Section 204 of the Delaware General Corporation Law (the “DGCL”) has served its purpose by enabling corporations to retroactively cure defects in their corporate records and by allowing corporate practitioners to give clean legal opinions as to, among other things, a corporation’s capitalization. As the Delaware courts have noted, however, Section 204 of the DGCL (“Section 204”) is not “a license to cure just any defect.” In a recent opinion, Nguyen v. View, Inc., 2017 WL 2439074 (Del. Ch. June 6, 2017), the Delaware Court of Chancery held in a proceeding brought pursuant to Section 205 of the DGCL (“Section 205”) that Section 204 may not be used to ratify a “deliberately unauthorized corporate act” (2017 WL at *2) in order to “undo a stockholder vote rejecting a transaction proposed by the company’s board of directors.” 2017 WL at *10.