Document: Crown EMAK Partners, LLC v. Kurz, Consol. Nos. 64, 2010 and 85, 2010 (Del. Supr. April 21, 2010)
In this opinion, the Delaware Supreme Court affirms in part and reverses in part the recent decision of the Court of Chancery addressing various issues arising out of a battle for control of the corporation’s board of directors.  A summary of the Court of Chancery’s opinion is available in our February 2010 case updates.  The Supreme Court upheld the Court of Chancery’s decision with respect to the proper procedure for reducing the size of a board of directors below the number of directors currently in office, but disagreed with the Court of Chancery’s holding with respect to the ability of a stockholder circumvent the terms of the applicable Restricted Stock Grant Agreement and invalidated the Purchase Agreement on the grounds that it was not permissible to effectively convey all voting and economic interest in the shares subject to the Restricted Stock Grant Agreement, as that would be the functional equivalent of transferring full ownership of the shares, which would have constituted a breach of the Restricted Stock Agreement.