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Del. Code Ann. tit. 8, § 228 contains no language suggesting that action accomplished by stockholders through written consent without a meeting, without prior notice and without a vote, may be lawfully deferred or thwarted on grounds not relating to the legal sufficiency of the consents obtained.
Plaintiffs advised defendant that they were interested in acquiring control of defendant. Being opposed to the action, defendant's board of directors (board) rejected plaintiffs' proposal. Plaintiffs subsequently renewed the offer and informed the board that if again the offer was rejected, plaintiffs would solicit consent from defendant's shareholders. At that time, defendant's certificate of incorporation lacked any provision relating to the solicitation of shareholder consents under Del. Code Ann. tit. 8, § 228. Subsequently, the board adopted a bylaw to regulate shareholder consents. Plaintiffs sought and obtained a preliminary injunction against enforcement of the bylaw, as the trial court found the bylaw to be in direct conflict with the statutory grant of power to the shareholders under § 228. Defendant appealed.
Was the bylaw in direct conflict with the statutory grant of power to the shareholders under § 228, thereby justifying the grant of preliminary injunction in favor of the plaintiffs?
The judgment was affirmed. The Court held that the lower court properly concluded that defendant's bylaw was unenforceable because it limited the taking of corporate action by written shareholder consent in lieu of a stockholders' meeting; thus, it was clearly in conflict with the letter and intent of § 228 and was so pervasive as to intrude upon fundamental stockholder rights guaranteed by statute.