The Delaware Court of Chancery recently determined the proper composition of a board in a proceeding under DGCL § 225 styled as Rainbow Mountain Inc. v. Begeman, C.A. No. 2018-0403-PAF (Del. Ch. August 25, 2025).

This case involved a dispute among 5 siblings and their extended family over the management and ownership of Virginia real estate they inherited. The litigation of this internecine dispute has spanned more than two decades, with lawsuits in Delaware and Virginia. See footnote 8. The corporation involved was a nonstock corporation.

There is no separate Delaware statute for nonstock corporations. Instead DGCL § 114 is a “translator” provision.

There are many important factual aspects of this 33-page decision that deserve careful attention, but my intent in this short blog post is to highlight a few of the most noteworthy and widely applicable aspects of the legal analysis.

Highlights

• This post-trial opinion held that the written consent at issue validly removed prior board members of a nonstock corporation which rendered invalid the subsequent decisions of a later board that was not properly constituted.
• The court explained the well-settled principle that a § 225 proceeding is limited in scope. Slip op. at 14-15.
• To determine the validity of a written consent in May 2017, the court needed to decide whether persons signing the written consent validly constituted a majority of the members–at that time–of the nonstock corporation. Slip op. at 16. See § 141(k) and (d), as well as § 228(b). The court’s analysis on this particular issue, applying the facts of this case, spanned almost 10-pages. Slip op. at 17-26.
• Applying its equitable powers, and based in part on § 227(b), the court appointed a Magistrate in Chancery to oversee an annual meeting under § 215 to elect directors.
• The court also addressed the issue of the proper method to amend the Certificate of Incorporation for a nonstock corporation, pursuant to § 242(b)(3).