Delaware
How Blasius Industries v. Atlas Corp. applies in Delaware: state-specific rules, key cases, and bar exam notes for Other.
Delaware law recognizes the principles established in Blasius, particularly the need for board action to respect shareholder voting rights. Delaware courts apply a heightened scrutiny standard when examining actions that might disenfranchise shareholders.
In Delaware, the principle from Blasius is that a board of directors must have a legitimate reason to interfere with the shareholder franchise, and any such action is subject to enhanced scrutiny under the Unocal framework.
Established that boards of directors may take defensive measures to protect their interests, but such actions must not unjustly disenfranchise shareholders.
Reinforced the need for boards to align their actions with the overarching principles of shareholder democracy and proper motivation.
Clarified that in a sale of control, directors must prioritize shareholder interests and cannot use defensive tactics to entrench themselves.
Delaware’s approach emphasizes a strong protection of shareholder rights while allowing for a board's defensive measures under certain circumstances. In contrast, federal law generally provides broader protections for directors against shareholder challenges, often affording more latitude for board decision-making absent evidence of bad faith.
Understanding the application of Blasius in Delaware is crucial for the bar exam, especially in questions related to corporate governance and the fiduciary duties of directors.