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In a recent decision, the Court of Chancery of the State of Delaware addressed a dispute at a private Delaware corporation concerning the removal of two officers by the board under a notice of board meeting that the court found misleading. The case underscores the importance of fair notice, board process transparency and the interplay of by-laws and equity.
Background
Altumind Inc. provides back-office operations and IT-related consulting and services. Its board consisted of five directors: the three plaintiffs in this case (Ghatty, Mudunuru, Kotagiri), and two defendants (Mudili, Naderi) who at the time served as officers: Mudili was co-CEO & Treasurer, and Naderi was Senior VP of Global Sales.
On February 19, 2025, Ghatty (President and co-CEO) emailed the directors proposing a board meeting to be held on March 20 to address governance and transparency. On March 7, a formal notice and agenda were sent for a "first in-person board meeting ... in San Jose, CA (subject to availability of directors)". The agenda items included a review of a request for financials and related documentation, discussion of alleged unauthorized transactions, new signatory protocols and a "proposed recognition and role expansion for Naderi."
On March 13, Naderi accused Ghatty of "self-dealing" and issued an ultimatum: either Ghatty accepts a buyback offer by close of business, or Naderi would "withdraw from the company and file for its dissolution. Ghatty denied any misconduct and invited Naderi to raise the issues at the meeting.
On March 19 (one day before the meeting), Mudili and Naderi notified the board they could not attend the meeting. Nevertheless, the board meeting was held on March 20 as planned with Ghatty, Kotagiri, and Mudunuru in attendance. There were no contemporaneous minutes, but resolutions dated April 8 stated that appropriate resolutions were adopted at the meeting removing Mudili and Naderi as officers.
Directors Ghatty, Mudunuru and Kotagiri then commenced an action under Section 225 of the Delaware General Corporation Law seeking a declaration of valid removal. Defendants Mudili and Naderi argued among other things that the meeting notice was inequitable. Section 225 allows the Court of Chancery to determine the validity of the election of a director or appointment of an officer.
Legal Holding & Key Reasoning
The by-laws of Altumind distinguished between regular board meetings and special board meetings. Because this was the first board meeting in the company's three-year history and was called ad-hoc by the President, the Court held it was a special meeting.
For a special meeting, the bylaws required three days' notice by electronic transmission, which the company satisfied. The defendants argued, however, that the notice was defective for failing to state the meeting's purpose – their removal as officers. But the by-law provision cited by the defendants requiring a notice to state the meeting's purpose pertains to meetings of stockholders, not the board. The by-laws lack an equivalent requirement for notice of special meetings of directors.
The Court nevertheless determined that although the technical notice requirements were met, the notice was "inequitable" because it misled the two directors whose removal as officers was planned. The agenda indicated a "proposed recognition and role expansion for Naderi" which directly contradicted the eventual vote to remove him. The notice did not clearly indicate that their removal from office would be considered. The Court characterized the plaintiffs' conduct as a "bait-and-switch" that compromised deliberation and fair treatment, and held that all directors are entitled to "fair and non-misleading notice of the agenda for a special meeting."
Because the notice was inequitable, the board actions taken (the purported removal of the officers) were voidable (not inherently void) and, absent proper cure, the defendants (Mudili and Naderi) remain in their officer roles.
Why This Matters for Emerging Companies
The clear lesson of Altumind is that even when a company complies with the mechanical notice requirements in its by-laws, that compliance may not suffice if the notice is misleading or fails to give directors a fair opportunity to prepare.
In many emerging companies, the same person may serve as a director and officer. This case demonstrates that removing someone from an officer position (especially when also a director) requires not just majority vote but fair process and proper agenda transparency.
Altumind shows that when a group of board members calls a meeting with an agenda that omits major planned actions (or misleads invitees), the court may intervene. This is especially relevant in companies where there are competing factions (founders vs. investors vs. outside directors). Ensuring the agenda is truthful, comprehensive and gives fair notice protects the company from challenge. While special meetings are a convenient tool especially for fast moving startups, they are riskier when significant corporate actions are taken without adequate notice. If you plan major officer removals or structural changes at a board meeting, ensure agenda transparency.
Board meeting notices should be drafted with sufficient detail about any major action so that invitees understand and can prepare for what will be discussed.
The Altumind decision is a strong reminder that in Delaware, fairness of process and transparency in board-level decision-making matter, not just for large public companies but for private ones as well. Removing officers (or making major governance changes) without clear and honest notice can expose the company to invalidation of its actions.
In the fast-moving world of startups, speed and agility are virtues, but not at the expense of process and fairness. Boards, founders, officers and investors should heed this ruling as a governance warning flag.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
