Hoschett v. TSI International Software, Ltd.

Delaware Court of Chancery · 1996 · Corporations

683 A.2d 43 (1996)

Updated August 22, 2026

Corporationsannual meetingsstockholder written consentdirector electionsDGCL 211DGCL 228DGCL 219annual meeting

Facts

TSI, a Delaware corporation formed in 1993, had never held an annual meeting for the election of directors. The plaintiff was a registered owner of 1,200 shares of TSI common stock and filed suit after more than 13 months had passed without an annual meeting. After suit was filed, TSI received a written consent from holders of a majority of the voting power purporting to elect five directors to serve until their successors were duly elected and qualified. TSI argued that this written consent satisfied any need to hold an annual meeting.

Issue

Does stockholder action by written consent under DGCL Section 228, taken after suit is filed and purporting to elect directors, satisfy the corporation's obligation under DGCL Section 211(b) to hold an annual meeting for the election of directors and thereby moot a stockholder's claim to compel such a meeting?

Rule

DGCL Section 211(b) imposes a mandatory obligation to hold an annual meeting of stockholders for the election of directors. Stockholder written consent under DGCL Section 228 may be used to remove holdover directors and fill resulting vacancies, but absent unanimous consent it does not satisfy, replace, or preclude the corporation's continuing duty to convene an annual meeting; directors so designated serve only until the next annual meeting.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lakeview Analytics, Inc., a Delaware corporation based in Denver, has not held an annual meeting in 18 months. Nina Patel, a record stockholder, files an action to compel one; two weeks later, holders of 58% of the voting power sign a written consent naming a new slate of directors to serve until successors are elected and qualified.

What is the strongest argument that Nina should still prevail on her request to compel an annual meeting?

Explanation. The majority opinion holds that Section 211 imposes a mandatory obligation to hold an annual meeting, and a majority written consent under Section 228 does not replace or satisfy that duty. Even assuming the consent validly removed holdovers and designated replacements, the annual meeting must still be held.