A Delaware court ruled on August 28, 2026, that ATG Capital Opportunities Fund LP can proceed with its director nominations for Empery Digital, Inc. The court found that Empery’s board improperly rejected ATG’s nominations, which has significant implications for corporate governance and shareholder rights.
The case, ATG Capital Opportunities Fund LP v. Ryan Lane, C.A. No. 2026-0447-LWW, centers around a conflict between an activist investor and the board of Empery Digital, a company focused on cryptocurrency investments. The ruling is crucial as it reinforces the rights of shareholders to nominate directors, especially in contentious corporate environments.
Background
ATG Capital, led by activist investor Gabi Gliksberg, sought to nominate a full slate of directors to Empery Digital’s board amid concerns over the company’s declining stock value and management decisions. The board, led by Ryan Lane and other executives, rejected the nominations, citing concerns about undisclosed relationships between ATG and other investors, particularly Tice Brown, who was also attempting to influence the company’s direction.
The dispute escalated after Empery’s board adopted a stockholder rights plan to limit ATG’s influence, which ATG argued was a defensive measure to entrench the existing board. Following the board's rejection of ATG's nominations, the activist investor filed a lawsuit seeking to invalidate the board’s decision and allow its nominees to stand for election.
The Ruling
Vice Chancellor Will of the Delaware Court of Chancery ruled in favor of ATG Capital, stating that the board’s rejection of the nomination notice was both contractually improper and inequitable. The court emphasized that advance notice bylaws do not permit boards to exclude candidates based solely on their opinions of the candidates’ suitability. The ruling stated, “It is the fundamental right of the stockholders—not the directors—to select the individuals who will determine the strategic direction of the company.”
The court found that Empery did not have a bylaw requiring the disclosures the board claimed were necessary for the nominations. The ruling noted that the board’s reliance on general provisions incorporating federal proxy rules was misplaced, as those rules were not explicitly invoked until the trial. The court concluded that the nomination notice was valid and that the board had acted beyond its authority in rejecting it.
Impact
This ruling has significant implications for corporate governance, particularly regarding the rights of shareholders to nominate directors. It reinforces that boards cannot unilaterally dismiss nominations without clear and explicit bylaws justifying such actions. The decision is expected to empower activist investors and enhance shareholder influence in corporate decision-making.
Moreover, the ruling may set a precedent for future cases involving the interpretation of advance notice bylaws and the rights of shareholders in proxy contests. It highlights the necessity for boards to adhere strictly to their bylaws and not impose additional requirements that are not explicitly stated.
What's Next
Following this ruling, ATG Capital’s nominees will be eligible for election at Empery Digital’s upcoming annual meeting. The board may also face scrutiny regarding its governance practices and the measures it has taken to limit shareholder influence. There is potential for further litigation if the board attempts to implement additional defensive strategies against shareholder activism.