This article was prepared by Keith Walter, a partner in the Delaware office of Lewis Brisbois.

In Ghatty v. Mudili, C.A. No. 2025-0615-LLW (Del. Ch. Oct. 21, 2025), the Court of Chancery addressed a § 225 dispute over the removal of two corporate directors of a private Delaware corporation. The plaintiffs—three directors constituting a majority of the company’s five-member board—purported to remove the two defendant directors from their officer positions at a board meeting. The defendants challenged the propriety of their removal. Although the notice of the meeting complied with the company’s bylaws, the Court held that it was inequitable and therefore improper.

Key Facts

One of the plaintiffs, acting in his capacity as president, called the company’s first in-person board meeting in its three-year history, providing approximately one month’s notice.  The notice included a detailed agenda addressing governance and financial issues. The agenda did not disclose that the board would consider removing the defendant directors from their officer roles. To the contrary, one agenda item proposed “recognition and role expansion” for one of the defendants.

Shortly before the meeting, relations among the directors deteriorated. The defendant directors advised that they would be unable to attend the meeting due to “tight schedules.”  Although the president offered to provide a virtual attendance option and to schedule an additional meeting at a later date, the majority directors proceeded with the meeting and voted to remove the defendants as officers.

Court’s Analysis

The Court first analyzed whether the meeting was a regular or special board meeting under the company’s bylaws. Applying settled principles that corporate bylaws are contracts interpreted according to their plain meaning, the Court held that the meeting was a special meeting because it was not held pursuant to any standing schedule, was called by the president, and was the first board meeting in the company’s existence.

The Court next considered whether the special meeting complied with the bylaws’ notice requirements. The bylaws permitted the president to call a special meeting on three days’ notice by electronic transmission, and they did not require that the purpose of a special board meeting be stated. In addition, the bylaws authorized the board to remove officers “at any time” by majority vote and imposed no special notice requirement for officer removals.  Accordingly, the Court concluded that the notice technically complied with the bylaws.

Technical compliance, however, did not end the Court’s inquiry. The Court held that the notice was inequitable, describing it as a “bait-and-switch” that concealed the plaintiffs’ true intention to remove the defendants from office. The Court framed the dispositive issue as “whether all directors are entitled to fair and non-misleading notice of the agenda for a special meeting.”

Citing Delaware Supreme Court precedent, the Court emphasized that Delaware law values “the collaboration that comes when the entire board deliberates on corporate action and when all directors are fairly accorded material information.” It does not endorse board factions developing “Pearl Harbor-like plans,” or engaging in “intentional duplicity,” “sandbag[ging],” or “trickery” toward fellow directors. The inequity was particularly pronounced because the agenda affirmatively suggested an expanded role for one defendant while omitting any reference to his impending removal.

The Court also rejected the plaintiffs’ argument that notice was unnecessary because the removed directors lacked sufficient voting power to block the action. The Court held that “all directors are entitled to ‘equal treatment’ and ‘fair notice’ regardless of their stock ownership and voting power,” because fair notice promotes a genuine deliberative process.

Because the notice for the board meeting was inequitable, the Court held the defendants remained officers of the company.

Takeaway

This decision reinforces that equity polices boardroom conduct even where bylaws are formally satisfied. Delaware courts will not permit directors to use misleading agendas or omissions to ambush fellow board members on matters of fundamental importance, such as officer removals. Fair and non-misleading notice is required not because dissenting directors can block the action, but because Delaware law values informed deliberation, collegial governance, and equal treatment at the board level.