Application of a Voting Limitation in the Company's Charter to Invalidate Stockholder Votes in a Proxy Contest Was Improper
When director actions affect an election of directors or a stockholder vote on matters of corporate control, the board's actions must satisfy enhanced scrutiny under the legal test set forth in Blasius Industries v. Atlas.
July 20, 2022 at 09:00 AM
4 minute read
CommentaryUnder Delaware law, director actions are twice-tested: first for legal authorization under a company's organizational documents or positive law, and second under equitable fiduciary principles. A company's organizational documents may only eliminate or modify fiduciary duties and the attendant judicial standards of review to the extent expressly permitted by the Delaware General Assembly. When director actions affect an election of directors or a stockholder vote on matters of corporate control, the board's actions must satisfy enhanced scrutiny under the legal test set forth in Blasius Industries v. Atlas.
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