The Delaware Court of Chancery on Tuesday granted expedited proceedings in a Chancery SaaS Buyback Suit accusing Semrush Holdings Inc. and its co-founder, Oleg Shchegolev, of orchestrating a stock repurchase designed to restore his majority voting control — allegedly without cost and without proper shareholder consent.
Vice Chancellor Lori W. Will fast-tracked the case after a hearing in which none of the defendants appeared, despite receiving prior notice. The court also questioned whether the matter could intersect with ongoing constitutional challenges involving Delaware’s Section 144 “safe harbor” protections currently under review by the state’s Supreme Court.
Investor Claims Founder Used Buyback to Regain Control
The lawsuit, filed October 7 by stockholder Chirag Mody, alleges that Shchegolev — Semrush’s largest shareholder — “exerted influence” to approve a $150 million stock repurchase on August 4, enabling him to regain majority control through reduced share count. The complaint claims this maneuver would otherwise have cost him $75 million if done through direct purchase.
According to Mody’s attorneys at Bernstein Litowitz Berger & Grossmann LLP, the board’s approval came without a disinterested stockholder vote, lacked transparency about which directors approved the move, and ignored safeguards meant to prevent conflicted transactions.
“A board can’t just allow a transfer of control to happen,” attorney Daniel E. Meyer told the court. “There has to be an active, independent process — and here, none appears to exist.”