564 A.2d 651
SYNOPSIS:
These two actions were consolidated and tried together in a Delaware court.
The validity of votes for the board of directors of defendant corporation was challenged by the defendant's largest shareholder, which was the plaintiff corporation.
FACTS:
-Two separate cases pitting the directors of defendant corporation against its largest shareholder, plaintiff corporation, were consolidated and tried together, requiring the court to determine who could sit on defendant's board of directors.
-The first challenged the validity of board action taken at a telephone meeting that added two new members to defendant's board.
-The second required the court to determine the outcome of plaintiff 's consent solicitation.
HOLDING:
-The court held as to the first case that even though defendants acted on what their view of the corporation's interest was, their action actually constituted an offense to the relationship between corporate directors and shareholders.
-As a result, it was both invalid and void.
HOLDING:
-The court held as to the first case that even though defendants acted on what their view of the corporation's interest was, their action actually constituted an offense to the relationship between corporate directors and shareholders.
-As a result, it was both invalid and void.
-As to the second case, the court held that the judges of election properly confined their count to the written "ballots" before them.
-The plaintiff's solicitation for consent had failed to garner the support of a majority of the defendant shares.
RULES:
-The directors are in effect shareholders' agents.
-The plaintiff's solicitation for consent had failed to garner the support of a majority of the defendant shares.
RULES:
-The directors are in effect shareholders' agents.
-If the purpose of an action is to obstruct the shareholders' reasonable control over their business, that is inequitable.
-Basically, the directors work for the shareholders, and if there is a disagreement between the directors and the shareholders, the directors have to defer to the shareholder's judgment.
OUTCOME:
The defendant corporation prevailed.
The court held that any mistakes that were made in counting the votes did not alter the outcome of the vote for members of the BOD of the defendant corporation.
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OUTCOME:
The defendant corporation prevailed.
The court held that any mistakes that were made in counting the votes did not alter the outcome of the vote for members of the BOD of the defendant corporation.
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Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?
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