Two of you started it. You took the CEO title, you run the business day to day, and at some point you both agreed you'd join the board and split the equity evenly. Nobody turned that agreement into a formal corporate action. The cap table shows the even split, and your co-founder's own emails call you the CEO and co-founder. Everyone behaves as though the arrangement is real, so it feels real.
Then something breaks. A financing, a fight about direction, a termination. And the question stops being what everyone understood. It becomes what anyone can establish, and how long establishing it takes.
What the July 20 ruling actually did
On July 20, 2026, a Magistrate in Chancery issued a letter ruling on a motion to dismiss in Tchernavskikh v. Accetturo, C.A. No. 2025-1284-LM (Del. Ch.). The motion was granted in part and denied in part.
The disposition, precisely. On the current pleadings, a co-founder whose business partner had described her in writing as the company's CEO and co-founder had not shown she was a director. Her derivative claims survived on a different footing: she adequately pleaded continuing stock ownership. Her claim for declaratory relief and her conversion claim also survived. Her breach of contract, fraud, and negligent misrepresentation claims were dismissed with prejudice, and leave to amend was denied.
The fraud and negligent misrepresentation claims failed for a different reason. Her own allegations and exhibits treated the representation that she held 50 percent of the company as true, so she had not plausibly pleaded the false statement those claims required. The same documents that supported one theory undercut another.
That split is the lesson, because the court treated her alleged directorship differently from her alleged stock ownership. On the current pleadings, the court concluded that she had not established director status. It reached no such conclusion on the ownership question, and expressly declined to resolve it: "At this procedural stage, the Court need not determine which interpretation ultimately proves correct. It need only decide whether Plaintiff's interpretation is reasonably conceivable."
Part of what survived was an alleged oral ownership arrangement. At the pleading stage, the court wrote, it "cannot disregard Plaintiff's factual allegations concerning the parties' oral ownership arrangement or resolve conflicting inferences arising from the documentary record," and whether she can substantiate an ownership interest outside her stock purchase agreement "presents a factual question that cannot be resolved on a Rule 12(b)(6) motion."
So the documents did not end the inquiry. Nothing here decides who owns what. And surviving a motion to dismiss is not winning: it means a claim was reasonably conceivable on facts the court assumed to be true.
The limits on all of this
This came from a Magistrate in Chancery. Exceptions are permitted under Court of Chancery Rule 144 and are stayed until the remaining claims are resolved, so the ruling is not final and it is not binding precedent.
Every fact in it is a pleading-stage allegation, and nobody has been found to have done anything wrong. The director finding is expressly limited to "the current pleadings."
And all of this is Delaware corporations law: the DGCL, which lives at Title 8 of the Delaware Code (8 Del. C.). Delaware LLCs run on a different statute, 6 Del. C. ch. 18, with different defaults and no statutory board of directors. Other states differ on filling vacancies, removing directors, and written consents. If your company is an LLC, or is incorporated outside Delaware, the questions below still apply. The answers come from a different rulebook.
There was no second seat to give
The company's bylaws said the number of directors "is one (1)," changeable by a resolution of the board or of the stockholders. The other co-founder held that single seat. Neither side alleged a vote to expand the board to two seats, or to appoint the plaintiff to one. The court's conclusion was short: "Without a proper vote, Plaintiff's allegation that she was given a board seat during the October 3, 2024 agreement fails."
That is a design problem, not a filing problem. The alleged promise did not itself expand the board or put her on it. Creating another seat and filling it takes valid corporate action under the company's own governing documents and Delaware law, and companies differ on what that sequence looks like. A title, an operational role, an ownership percentage, and an expectation of a seat do not establish board membership on their own.
Board size lives in Section 141(b): "The number of directors shall be fixed by, or in the manner provided in, the bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number of directors shall be made only by amendment of the certificate."
Once a seat exists, Section 223 governs who fills a vacancy or a newly created directorship: absent a contrary provision in the certificate or bylaws, the sitting directors by majority vote, including a sole remaining director. Stockholders elect directors under Sections 211 and 212.
Running the company is officer work
Set the seat problem aside and the conduct she alleged was still officer conduct. Delaware "distinguishes between managerial authority and board authority." Officers "may exercise substantial operational control over a corporation without simultaneously serving as directors." So allegations that she negotiated with investors, supervised employees, managed operations, or served as CEO "do not themselves establish that Plaintiff occupied a seat on FilmPort's board."
What the complaint did not allege mattered more. It did not allege that she participated in formal board deliberations, voted on board matters, or executed written board consents. On investor meetings, the court observed that attendance "is typical for other corporate roles, including CEOs, co-founders, and other employees, not just for directors."
Section 142 explains why a CEO title proves so little. A corporation has "such officers with such titles and duties as shall be stated in the bylaws or in a resolution of the board of directors." Officer authority is delegated authority. Section 141(a) puts the underlying power elsewhere: the business and affairs of the corporation "shall be managed by or under the direction of a board of directors."
The de facto director doctrine is real, and it did not reach her here. In Stream TV Networks, Inc. v. SeeCubic, Inc., 250 A.3d 1016 (Del. Ch. 2020), the Court of Chancery found it reasonably probable that certain individuals were de facto directors, on a much heavier record: written invitations, acceptances, eight board meetings, and minutes listing them as board members. The July ruling also drew on an older Delaware principle that a de facto office has to correspond to an office that exists in law.
Four roles, four different sets of rights
Founder. A description of history. The DGCL assigns it no powers. Whatever you actually hold, you hold through the next three roles and through your contracts.
Officer. Created by the bylaws or a board resolution under Section 142. Officers can run everything and hold no board vote. In this case, the bylaws let the board remove any officer, with or without cause, by majority vote, and the other co-founder was both sole director and chair. Your employment agreement stands on its own, and removal from an office does not by itself erase contract rights.
Stockholder. This footing rests on share ownership: one vote per share unless the certificate says otherwise (Section 212), the right to elect directors (Section 211), and the right on written demand under oath, for a proper purpose, to inspect the stock ledger and other books and records (Section 220). Those shares usually carry conditions. Section 202 permits certain written stock restrictions, and the governing documents and applicable agreements determine their terms and mechanics. In this case, the company could repurchase unreleased shares at the original purchase price once the holder stopped being a "service provider." Voting agreements and investor protective provisions sit on top of all of it, and can decide how your shares get voted and who gets nominated long before any board meets.
Director. Where Section 141(a) power sits. One detail worth knowing: under Section 141(f), board action by written consent requires that all directors consent. Unless the certificate of incorporation provides otherwise, Section 228(a) permits stockholder action by written consent with the minimum votes that would have carried the matter at a meeting.
Practical influence is real and valuable. It is not itself a legal right.
Where inconsistent records actually bite
Incomplete or conflicting records do not end an inquiry. They do something more expensive. They create uncertainty about what was agreed, and they hand the other side conflicting inferences to argue over. They turn a question that was easier to resolve while everyone agreed into discovery, motion practice, and someone else's calendar.
Two places founders routinely misread their own files.
The capitalization table. A cap table is not automatically meaningless, and it is not automatically the legal answer either. Section 219(c) defines the stock ledger functionally, as "1 or more records administered by or on behalf of the corporation" recording the stockholders of record, their addresses and share counts, and all issuances and transfers, kept in accordance with Section 224. Section 224 allows those records to live in electronic form. So a cap table can serve as, or form part of, the statutory stock ledger, if it is actually administered as the company's record of stockholders, issuances, and transfers rather than maintained as a planning spreadsheet.
What the file is called does not decide that. And the "only evidence" language in Section 219(c) is scoped to who may examine the stockholder list and vote under that section. It is not a general rule that the ledger conclusively settles ownership for every purpose.
The missing signature. Board action by written consent without a meeting generally requires all directors to consent under Section 141(f). But a defective written consent does not by itself answer whether the action was validly taken some other way, at a properly held meeting for example. Find the minutes, resolutions, consents, and governing documents before you conclude that something never happened.
The governance audit
Run this while the relationship is good. You're looking for the places where the shared understanding, the contracts, and the corporate records tell different stories.
- Board seats. Who occupies each seat, and what corporate action put them there? Read what the charter and bylaws say about board size, vacancies, appointment, removal, and voting, then compare that to who you think is governing.
- The formal record. Pull the incorporator actions, the board and stockholder consents, and the meeting minutes since formation. Read the signature pages, and check director consents against Section 141(f) and stockholder consents against Section 228.
- Ledger against cap table. Does the formal stock ledger reconcile with the cap table and with the underlying grant or purchase agreements, issuance records, and payment records? Where they disagree, find out which one the company has actually been administering.
- Authorization for each issuance. For every block of stock, identify the board authorization or the valid delegation behind it. Section 152(b) lets a board resolution delegate issuance authority to a person or body, provided the resolution fixes a maximum number of shares, a time period, and a minimum consideration. Direct board approval of each individual issuance is not the only valid path.
- Conditions on your own shares. Which shares carry vesting, repurchase, forfeiture, or termination provisions? Write down in one sentence what happens to your unvested stock the day you stop working there.
- Voting control. Find every voting agreement, side letter, protective provision, and investor right, and name what each one controls.
- Officers and delegated authority. Find the bylaw or resolution that names each officer. Note what authority it hands over, and what the removal standard next to it says.
- Promises never documented. List every governance or equity promise that was never reflected in an agreement or, where required, valid corporate action. Those are the entries most likely to be established through a dispute rather than through a document.
Most of this you can do yourself: find the records, compare them to what you and your co-founders actually believe, mark the mismatches, and bring precise questions to counsel. "Ask your lawyer" is not the action item. Knowing which three documents disagree is.
Closing perspective
Founders rarely lose control in a dramatic moment. They lose it slowly, across the eighteen months when everyone is too busy building to sign things, and then all at once on the day someone finally reads the bylaws.
I want to be careful about the lesson, because the easy version of it is wrong. An informal understanding is not automatically worthless. Oral agreements, course of conduct, and disputed documents can all support fact-intensive claims, and one of them is very much alive in this case. The founder's problem is not that her understanding counts for nothing. It's that establishing it may take years of litigation that timely documentation could have made unnecessary.
Formal authorization and consistent records are the reliable way to establish what you agreed. They are not the only conceivable way a party might assert a right, and that distinction matters, because the unreliable way is the expensive one.
The repair is usually easier before a dispute, financing, or termination constrains the available options. Not every gap closes cleanly after the fact either. Fiduciary duties to other holders, investor consent rights, tax consequences, contractual restrictions, and an active dispute can each narrow what is actually available to you. Which is the argument for doing it now, while everyone still agrees on what happened.
This article is for informational purposes only and does not constitute legal advice. Every company's situation is different, and you should consult with qualified legal counsel before making governance or legal decisions based on the developments discussed here.
