Datapoint Corp. v. Plaza Securities Co.

Asher B. Edelman, general partner of both plaintiffs and beneficial owner of more than 10% of Datapoint's stock, advised the latter's chairman that he was interested in acquiring control of Datapoint and submitted a written proposal to acquire control of Datapoint. However, Datapoint's board of directors rejected the offer. Edelman renewed his offer and stated that if it were rejected he would consider the solicitation of consents from shareholders. A few days later the company amended its bylaws, which prior to Edelman's offer had no provision relating to shareholder consents. The new bylaw provided management with more time to explore alternatives. The issue is whether the bylaw designed to limit the taking of corporate action by written shareholder consent in lieu of a stockholder's meeting conflicts with the Delaware code governing consent of stockholders in lieu of meeting. The Court of Chancery preliminarily enjoined Datapoint from enforcing the bylaw and Datapoint appeals.

A bylaw, which is so pervasive as to intrude upon fundamental stockholder rights guaranteed by statute, is invalid.

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