Delaware Business Litigation Report

Court Of Chancery Invalidates Vote Blocking Device

Johnston v. Pedersen, C.A. 6567-VCL (September 23, 2011)

This is a good discussion of the "enhanced scrutiny" that the Court of Chancery applies to board action that affects the right to vote.  Such action must have a "compelling justification" and the simple desire to avoid being thrown out of office, even by scalawags, is not enough.  Hence, here the Court invalidated the provisions of a specially issued series of preferred stock that had the right to block the removal of the board of directors.

Share