Document: Kurz, et al. v. Holbrook, et al., C.A. No. 5019-VCL, Laster, V.C. (Del. Ch. Feb. 9, 2010)
After trial, the Court ruled on the parties competing requests for relief under Section 225 of the DGCL as to the composition and control of the Board of EMAK Worldwide, Inc. (“EMAK”). Plaintiffs contended that sufficient stockholder consents were delivered to remove two of a five person board with two vacancies and fill three vacancies, thereby giving their group control of the board. Defendants claimed their group delivered sufficient consents to amend EMAK’s by-laws to, among other matters, set the number of directors at three. With the ability to name two directors under the terms of preferred stock, defendants could gain control of the board. The amended by-laws also provided that if the number of sitting directors exceeded three, a special meeting of stockholders would be held to elect the third director who would be the single successor. The Court held the by-laws to be void as in conflict with the DGCL, and that the Plaintiffs consents validly provided them with control of the Board. Specifically, the Court found that the by-laws sought to shrink the board below the number of sitting directors, which was in conflict with the DGCL.