This article was written by Rae Ra, a corporate litigation associate in the Delaware office of Lewis Brisbois.

In Vejseli v. Duffy, 2025 WL 1452842 (Del. Ch. May 21, 2025), the Court of Chancery held that Ionic’s directors breached their fiduciary duties by adopting a board reduction resolution in the face of a proxy contest, where they failed to prove the resolution was for a “valid, non-pretextual corporate purpose or that the [resolution was] reasonable and not preclusive.” The trial evidence “overwhelmingly” supported a finding that the resolution was not adopted on a “clear day,” and the Court noted that the lack of any record supporting the Ionic directors’ justifications for the resolution “raise[d] eyebrows.”

At the same time, the Court also found that the Ionic Board’s rejection of the plaintiffs’ nomination notice for failure to abide by the advance notice bylaw was proper “to advance a legitimate corporate purpose” and was not inequitable.

Under “the unusual facts of this case,” the Court ordered an injunction whereby the Board would re-open the ten-day nomination window under the advanced notice bylaw to allow for submissions of director nominations. Rejecting the argument that the injunction would serve as a “do-over” for plaintiffs who failed to comply with the advanced notice bylaw, the Court observed that here, it was the “Board’s wrongful conduct” that required the injunction. Balancing the equities, the Court held that an injunction was proper to allow Ionic stockholders to exercise their “sacrosanct” voting rights.