On August 28, 2026, Vice Chancellor Lori W. Will of the Delaware Court of Chancery in a post-trial decision on expedited claims invalidated the board of directors’ rejection of an activist investor’s nomination notice in a proxy context involving a publicly traded corporation that holds Bitcoin as a primary asset (the “Company”). ATG Cap. Opportunities Fund LP v. Lane, C.A. No. 2026-0447-LWW (Del. Ch. Aug. 28, 2026). The Court held that the board lacked both contractual grounds—under the Company’s bylaws—and equitable justification to reject the nomination and, thus, the activist’s nominees may stand for election at the Company’s annual meeting.
Plaintiff, an activist fund and stockholder in the Company (the “Investor”), sought to nominate a full slate of nine director candidates to replace the board. At the time, the Company’s stock was trading at a significant discount to the net asset value of its Bitcoin holdings, and the board suspected that the Investor would seek to capitalize on this discount by pursuing the liquidation of the Company’s Bitcoin holdings. The Company’s board rejected the nomination notice on three primary grounds: (1) the Investor’s alleged failure to disclose another stockholder as a “participant” in the Investor’s proxy solicitation; (2) the Investor’s alleged failure to disclose its short position in Bitcoin exchange-traded funds (“ETF”), which the board contended misaligned the Investor’s interests with other stockholders; and (3) alleged biographical omissions in the nominees’ questionnaires. The Investor filed suit to invalidate the rejection. At trial, the Company focused on the first two of its justifications.
Applying Delaware’s “twice-tested” framework, the Court first conducted a contractual review, holding that the alleged “participant” did not meet the definition under the Company’s bylaws, which incorporated the narrow standard under SEC Schedule 14A. The Court emphasized that this definition is limited to persons who finance or provide economic inducements for a proxy solicitation rather than persons who merely coordinate stock purchases, as here. The Court further held that the bylaws did not require disclosure of commodity hedges like the Investor’s Bitcoin ETF short position, because the bylaws specifically addressed only derivatives and short positions in the Company’s own stock.
Turning to the equitable analysis of the enhanced-scrutiny standard, the Court found that even assuming the board had a reasonable basis for concern about the Investor’s plans to liquidate the Company’s Bitcoin, rejecting the nomination was a disproportionate response. The board could have addressed its concerns through disclosure and advocacy in the proxy contest rather than removing the Investor’s slate from the ballot entirely.
The Court thus concluded that the Investor’s slate of nominees will stand for election.
The Court separately denied the Investor’s request to reopen the nomination window following the Company’s post-deadline announcement of a $65 million AI data-center investment—which the Investor contended was a strategic pivot necessitating reopening the nomination window. The Court explained that “no further equitable intervention is required” because it had validated the Investor’s nominees and stockholders will have a choice between the incumbent board and the Investor’s slate.
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