A Delaware court ruled against Gregory Freiberg, affirming his removal from the board of directors of Xonar Technology, Inc. The ruling came after Freiberg challenged his ousting, claiming that the company's shareholder consent process was flawed. This decision is significant as it clarifies the legal standards surrounding board member removals in Delaware corporations.
The case, Gregory Freiberg v. Xonar Technology, Inc., was filed on January 22, 2026, under Docket C.A. No. 2026-0093-KSJM. Freiberg, who served as President and Chief Development Officer at Xonar, argued that the shareholder consents used to remove him were invalid due to inaccuracies in the company's capitalization table. The court's decision underscores the complexities involved in corporate governance and shareholder rights.
Background
Gregory Freiberg joined Xonar Technology in 2023, bringing with him a wealth of experience in sales and capital raising. He was granted a significant equity stake in the company, which led to tensions between him and the company's founders, particularly regarding his compensation and share ownership. As disagreements escalated, Freiberg's relationships with the company's leadership deteriorated.
On January 5, 2026, a group of shareholders executed written consents to remove Freiberg from the board, citing concerns about his performance and the toxic environment he allegedly created. Freiberg contended that the consents were ineffective because they were based on an inaccurate assessment of the company's stock ownership.
The Ruling
The court ruled against Freiberg, stating that he failed to prove that the additional consents obtained after the initial removal were invalid. The judge noted, "Because the plaintiff failed to prove one of the two critical issues, this post-trial decision does not reach the second." This ruling was made by Judge McCormick of the Delaware Court of Chancery.
Freiberg's argument hinged on the claim that the company’s capitalization table did not accurately reflect the stockholder ownership, which he believed invalidated the removal process. However, the court found that the additional consents obtained by Xonar were valid and could be counted towards the majority needed for his removal.
Impact
This ruling has significant implications for corporate governance in Delaware. It reinforces the idea that shareholder consents, when executed properly, can effectively remove a director from a board, even if subsequent disputes arise over the validity of those consents. The decision also highlights the importance of accurate record-keeping and transparency in corporate governance.
Going forward, this ruling may serve as a precedent for similar disputes in Delaware corporations, emphasizing that directors must be diligent in understanding their rights and the processes involved in corporate governance. It also underscores the necessity for companies to maintain accurate and up-to-date capitalization tables to avoid disputes over ownership and voting rights.
What's Next
Freiberg has the option to appeal the court's decision, although the chances of success may be limited given the clear ruling on the validity of the shareholder consents. Additionally, there may be related cases pending as Freiberg has indicated ongoing disputes regarding his compensation and other grievances against Xonar and its founders.