Ratification of Defective Corporate Acts: An Overview

This guide was originally published on September 3, 2024, and has been updated as of June 26, 2026.

At a Glance

• This guide provides a high-level summary of the circumstances, under Sections 204 and 205 of the Delaware General Corporation Law (DGCL), where a corporation, its stockholders, and/or the Court of Chancery can ratify or validate defective corporate acts that would be void or voidable due to a failure of authorization.¹
• Defective Corporate Acts 
  1. These are acts or transactions that are within the corporation’s powers to effect but are “defective” (void or voidable) because management failed to obtain a required authorization, approval, vote, notice, filing, record date, or other step.
  2. Examples include:
     1. An over issuance of company stock.
     2. An election or appointment of directors done without proper authorization.
• Failure of Authorization
  1. This generally refers to corporate management’s failure to correctly effect an act or transaction in compliance with:
     1. The relevant provisions of the DGCL. 
     2. The certificate of incorporation, bylaws, or other organizational documents of the corporation.
     3. Any plan or agreement the corporation is party to, or the disclosure set forth in any proxy or consent solicitation statement.
     4. The failure of the board of directors or any officer of the corporation to authorize or approve any act or transaction taken by or on behalf of the corporation that would have required for its due authorization the approval of the board of directors or such officer.

What Steps Does a Board Need to Take to Ratify a Defective Corporate Act?

1. Draft a Resolution.
   1. For each act that needs ratification, the resolution must include: 
      1. The defective act(s). 
      2. The date the act(s) occurred.
      3. The nature of the failed authorization. 
      4. A statement that the board approves the ratification. 

**Note: if the defective act involves the issuance of putative stock, the resolution must also include the:

1. Type of stock. 
2. Number of shares.
3. Date of issuance.

2. Submit the Resolution for Stockholder Approval. 
   1. A company will not need stockholder approval if:
      1. Neither the DGCL nor the corporation’s organizational documents, plans, or agreements would have required stockholder approval for the act at issue.
      2. The act is not defective due to the corporation’s failure to abide by the rules governing business combinations with interested stockholders under Section 203 of the DGCL. 
      3. There are no shares of valid stock outstanding that are entitled to vote. 
   2. Procedural Considerations
      1. The following procedural issues are important for a board to keep in mind in connection with a stockholder ratification vote:
         • At least 20 days before the meeting where the vote is to take place, stockholders holding valid or putative stock need to be given notice of the meeting (date, time, place, and if applicable, purpose).
         • The quorum and voting requirements for ratification generally mirror those required to affect the corporate act in the first instance. 
         • If the defective act involves the corporation’s failure to abide by the rules governing business combinations with interested stockholders, a stockholder meeting will always be required. 

*** The next two steps may be optional for a corporation depending on the defective act being ratified among other factors outlined below. ***

3. File a Certificate of Validation. 
   
   1. Such action is required only in circumstances where the operative section of the DGCL requires certification in connection with the defective act via a filing with the State of Delaware, but that certification was either never filed or filed but needs to be amended to give effect to the corporate act.
   2. The board does not need to describe the underlying defective corporate act or the nature of the failure to obtain proper authorization. The certificate must comply with Section 204(e), however.
4. Send Notice of Ratification.
   1. If stockholder approval is required, the corporation must provide the statutory meeting notice described above.
   2. If stockholder approval is not required, the corporation must generally provide notice of the ratification under Section 204(g) of the DGCL to holders of valid and putative stock, whether voting or nonvoting, unless the corporation is a publicly listed company that has satisfied the relevant Securities Exchange Commission disclosure filing requirements.

What Role Does the Court of Chancery Play in the Ratification Process?

The Court of Chancery (the Court) has exclusive power to determine all actions brought under DGCL Sections 204 and 205. Section 205 gives the Court the power to make determinations and provide relief.

You may be wondering…

Who Can Bring an Action?

• Such actions may be brought by a successor entity to the corporation, a member of the board, or any record or beneficial holder of valid stock or putative stock. These classifications are determined as of the time of the defective act at issue.

I Have an Issue with How the Defective Act Was Ratified. Can the Court Help?

• Yes. Within 120 days of the ratified act’s effective date, one may bring claims that the ratification of the defective act is:
  1. Not effective.
  2. Only effective under certain circumstances. 
  3. Lacking proper authorization. 
• The Court can determine the validity and effectiveness of both the defective act that has been ratified and the process of its ratification.

What Does the Court Consider When Evaluating the Lawfulness or Completion of a Ratification Process?

• Did the corporation have a good faith belief that the defective act was originally approved or carried out in compliance with all relevant requirements?
• Have the corporation and the board treated the act as if the act was valid and properly ratified? 
• Has any person engaged in conduct based on a reliance that the act had been properly ratified?
• Has anyone been, or will any person be, harmed because of the ratification process the corporation undertook?
  
  • **Note**: If alleged harm would have occurred if the act was ratified correctly in the first place, the Court will not consider the harm in its analysis. 
• If the Court does not ratify the defective act, will someone be harmed?
• The Court may also consider any other factors or considerations it deems just and equitable.

What Else Does the Court Have the Power to Do?

• The Court can modify the ratification process or waive it altogether. 
• The Court also can determine the validity of any corporate act, transaction, stock issuances and their corresponding rights, or the corporation’s options to acquire stock.