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Laws-info.com » Cases » Delaware » Chancery » 2007 » MBKS Company Limited, et al. v. Jagan M. Reddy v. Abdul-Elah A. Mukred and Lawrence G. Smith
MBKS Company Limited, et al. v. Jagan M. Reddy v. Abdul-Elah A. Mukred and Lawrence G. Smith
State: Delaware
Court: Delaware District Court
Docket No: CA #1853-VCL
Case Date: 04/30/2007
Plaintiff: MBKS Company Limited, et al.
Defendant: Jagan M. Reddy v. Abdul-Elah A. Mukred and Lawrence G. Smith
Preview:IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY MBKS COMPANY LIMITED, a British Virgin Islands company, MBKS INC., a Delaware corporation, and MBKS II INC., a Delaware corporation, ) ) ) ) ) Plaintiffs, ) ) v. ) ) JAGAN M. REDDY, ) ) Defendant and ) Third-Party Plaintiff, ) ) v. ) ) ABDUL-ELAH A. MUKRED and ) LAWRENCE G. SMITH, ) ) Third-Party Defendants. )

C.A. No. 1853-VCL

MEMORANDUM OPINION Submitted: March 19, 2007 Decided: April 30, 2007 Arthur G. Connolly, III, Esquire, CONNOLLY BOVE LODGE & HUTZ, LLP, Wilmington, Delaware; Peter J. Kahn, Esquire, Edward C. Reddington, Esquire, WILLIAMS & CONNOLLY LLP, Washington, DC, Attorneys for the Plaintiffs and Third-Party Defendants. Kathleen M. Miller, Esquire, Joelle E. Polesky, Esquire, SMITH, KATZENSTEIN & FURLOW, LLP, Wilmington, Delaware, Attorneys for the Defendant and ThirdParty Plaintiff.

LAMB, Vice Chancellor.

The sole director of two Delaware corporations, purporting to implement a series of oral agreements with a fellow director, since deceased, adopted resolutions to cancel the common stock of the two Delaware entities (held of record by a British Virgin Islands corporation) and reissue a majority of the stock to himself. All three corporations move for summary judgment invalidating the resolutions. The corporations further move for a declaration that the British Virgin Islands corporation continues to own 100% of the stock of the Delaware entities and that its two designees are the sole directors of the Delaware entities.1 Because the cancellation of the existing shares was ineffective without an amendment to the certificates of incorporation, and since no consideration or benefit was to be paid to the Delaware corporations for the stock issued to the former director, summary judgment will be granted. I. A. The Parties2 The plaintiffs in this action are MBKS Company Limited ("BVI"), a British Virgin Islands corporation, and two Delaware corporations, MBKS Inc. ("Inc.") and MBKS II Inc. ("II Inc."). Jagan M. Reddy, the defendant, counterclaim

The director counterclaims under 8 Del. C.
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