July 25, 2024
A “donut hole” baked into a rushed Delaware General Corporation Law amendment by state lawmakers earlier this year has tripped up most governance concessions that information technology company N-able Inc. granted to its lead investors, a Delaware vice chancellor ruled on Thursday.
Vice Chancellor J. Travis Laster — whose strikedown earlier this year of charter-trumping stockholder pacts in West Palm Beach Firefighters’ Pension Fund v. Moelis & Co prompted the DGCL changes — observed in his Thursday decision that the new state code revisions needlessly created a “stub timeline,” or donut hole, that will oblige courts to apply the unamended law to other disputes, including N-Able’s, over stockholder agreements completed or pending before Aug. 1.
N-Able was sued by a stockholder in March over an agreement containing nine covenants, provisions or requirements that grant broad rights to Silver Lake Group LLC and Thoma Bravo LLC, owners of 62% of N-Able’s stock. The deal covers broad, charter-level areas, including board composition and size, director nomination, removal and candidate support obligations, as well as incurring or retiring debt.
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The proposed class is represented by Thomas Curry, David Wales and Adam Warden of Saxena White PA, and Julie Goldsmith Reiser and Richard A. Speirs of Cohen Milstein Sellers & Toll PLLC.