Frankino v. Gleason
Delaware Court of Chancery
1999 WL 1032773 (1999)
- Written by Robert Cane, JD
Facts
Sarn Frankino (plaintiff) was 55 percent shareholder of National Auto Credit, Inc. (National). Frankino desired to appoint loyal directors to National by expanding the board of directors in order to regain control of National’s operations. Previously, National’s board had amended the corporate bylaws in two relevant ways. The board amended, without shareholder involvement, article IX of the bylaws to require an 80 percent supermajority vote to amend article III of the bylaws. Article III controlled the size of the board of directors, among other things. As majority shareholder, Frankino deleted the 80 percent supermajority requirement of article IX. Then, Frankino amended article III, expanding the board from six to 13 directors. Both amendments were made by majority written consent as Frankino controlled 55 percent of National’s shares. Finally, Frankino elected seven new board members to the fill the vacancies that he created with his amendment to article III. Frankino sought an order confirming his bylaw amendments and expansion of the board of directors from the Delaware Court of Chancery.
Rule of Law
Issue
Holding and Reasoning (Chandler, J.)
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