Blasius Industries, Inc. v. Atlas Corp.

Board action taken for the primary purpose of interfering with shareholder voting power.

Atlas's board expanded the board size and filled the new seats after Blasius began a written-consent campaign seeking to add directors and pursue restructuring. The board acted to prevent Blasius from gaining board control through shareholder consent.

The court required a compelling justification when directors acted primarily to interfere with the shareholder franchise.

Chancellor Allen reasoned that shareholder voting occupies a special place in corporate governance. Even if directors acted in good faith and believed their strategy better for the company, a board action whose primary purpose is to impede the shareholder vote requires a compelling justification, which Atlas had not shown.

1. Which corporate actor gains authority or bears monitoring responsibility under the rule?
2. How does the rule affect agency costs without unduly impairing informed business judgment?