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N-able, Inc.

Case Details

Date Filed: March 16, 2023
Case Number: C.A. No. 2023-0326-JTL
Jurisdiction: Delaware Court of Chancery
icon-casetype Case Type: Shareholder Class Action

Case Summary

On March 16, 2023, Saxena White filed a class action complaint alleging that N-able, Inc. had entered into a stockholders agreement that improperly entrenched and perpetuated certain favored stockholders’ control over N-able’s affairs. The Complaint alleges that these arrangements violated the statutory and common law rights of N-able’s other public stockholders and their duly elected representatives on the Company’s Board of Directors to control and make the key decisions for the Company. Plaintiff sought declaratory relief in the Delaware Court of Chancery that the stockholder agreement violated Delaware law and is unenforceable.

As alleged in the Complaint, the stockholders agreement violates Delaware law by providing certain favored stockholders with contractual veto power over the most important decisions and functions properly entrusted to the Board. Indeed, the stockholders agreement between the Company and these stockholders goes so far as to deny the Board its due power over certain business strategies and core directorial functions such as the hiring and firing of the Company’s CEO, change of control transactions, and other large transactions. The stockholders agreement also violated Delaware law by providing the same favored stockholders with a contractual right to require the Board to recommend to shareholders the favored stockholders nominees for seats on the Company’s Board, as well as requiring membership on committees of the Board, so long as the favored shareholders continue to hold 30% of the Company’s total outstanding shares. The Complaint further alleges that the corporate charter for N-able violates Delaware law by providing the favored shareholders with the right to remove directors from the Board, even when they are minority shareholders, as long as they own at least 30% of the Company’s total outstanding shares.

The Plaintiff and N-able filed cross-motions for summary judgment on the issue of whether these arrangements violate Delaware law. The Court held oral argument on the motions on February 6, 2024. A decision has not yet been issued on the motions.

The Complaint is posted here.

Documents
Complaint