Corporations – Directors – Validity of By-Law Permitting Removal of Directors Without Cause
A by-law of defendant, a Delaware corporation, permitted removal of a director with or without cause by a majority vote of the stockholders. The certificate of incorporation provided for a staggered board system which divided the board of directors into three groups, the term of one group expiring at each annual meeting. At a special stockholders’ meeting three directors were removed without cause. Plaintiff, majority stockholder of the corporation, instituted an action to determine the validity of the removal. Held, the three directors were improperly removed since the by-law which allowed removal without cause was inconsistent with the certificate of incorporation and therefore void. Essential Enterprises Corp. v. Automatic Steel Products, Inc., 159 A.2d 288 (Del. Ch. 1960).