Allen v. Prime Computer, Inc.

540 A.2d 417 (1988)

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Allen v. Prime Computer, Inc.

Delaware Supreme Court
540 A.2d 417 (1988)

RW

Facts

Prime Computer, Inc. (Prime) (defendant) targeted Computervision Corporation for a hostile takeover. In accordance with Delaware’s shareholder-consent statute, Prime solicited the consent of Computervision’s shareholders to measures that would expedite the takeover. Martin Allen (plaintiff) and his colleagues on Computervision’s board of directors (plaintiffs) sued Prime to block the solicitation. In addition, the directors added two amendments to Computervision’s bylaws: § 12, which delayed for at least 20 days any action taken by shareholder consent, and § 13, which provided for an outside inspector’s review of the consent forms to ensure their validity. The inspector could report his preliminary findings no sooner than 20 days after the solicitation. The inspector’s findings were subject to challenges that would further delay the proceedings. Nothing in Computervision’s charter required these 20-day delays. The Delaware Court of Chancery enjoined enforcement of §§ 12 and 13, and Computervision appealed to the Delaware Supreme Court.

Rule of Law

Issue

Holding and Reasoning (Moore, J.)

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