The recent Chancery Court decision of Examen, Inc. v. VantagePoint Venture Partners 1996, read opinion here, involved the issue of whether California law or Delaware law applied to the stockholder vote of a company incorporated in Delaware but whose headquarters and primary place of business are in California. If California law applied, the holder of preferred shares would vote as a separate class and would have been able to block a merger. If Delaware law applied, all shareholders would vote together and the merger would likely be approved by the holders of common shares. In granting a Motion for Judgment on the Pleadings, Vice Chancellor Lamb relied on a long line of Delaware Supreme Court cases as well as a United States Supreme Court case for the seminal principle that the internal affairs of a corporation are governed by the law of that entity’s state of incorporation. Several days after the decision, Chancellor Chandler denied a stay pending appeal of the decision based on a 4-part test. In sum, the court denied a stay pending appeal due to a balancing of equities and the unlikelihood of success on appeal.
The Delaware Supreme Court shortly thereafter affirmed the decision to apply Delaware law. Read that opinion here.