## Facts

- National Auto Credit, Inc. (NAC) was a Delaware corporation whose bylaws included Article III (governing board matters, including board size) and Article IX (a “Miscellaneous” article).
- Sam J. Frankino, a stockholder, directly and indirectly controlled 55% of NAC’s stock and was in conflict with NAC’s incumbent board.
- Article IX purported to require an 80% supermajority vote to amend Article III, making Frankino’s 55% interest insufficient to expand the board if Article IX remained in place.
- Article IX did not state that an 80% vote was required to amend or repeal Article IX itself.
- Acting by written stockholder consent, Frankino first repealed Article IX’s supermajority provision by simple majority vote.
- Immediately after repealing the supermajority constraint, Frankino amended Article III by simple majority written consent to expand the board.
- Frankino then elected his nominees to the newly created directorships by majority written consent.
- Defendants (incumbent directors and NAC) opposed, arguing the supermajority requirement’s purpose would be defeated if Article IX could be amended by a bare majority and urging the court to imply a supermajority requirement for amendments to Article IX.

## Issues

1. Whether a stockholder majority may, by written consent, amend or repeal a bylaw (Article IX) that imposes an 80% supermajority to amend another bylaw (Article III), when Article IX contains no express supermajority requirement for its own amendment.
2. Whether the subsequent majority-consent amendment expanding the board under Article III and the election of new directors to the expanded board were valid.

## Decision

- The Court of Chancery, in a § 225 proceeding, held Frankino’s bylaw amendments and director elections valid.
- The court declined to imply a supermajority requirement for amending Article IX based on asserted purpose, reasoning that supermajority constraints must be stated expressly.
- The court ordered entry confirming (i) the validity of the repeal of Article IX’s supermajority provision, (ii) the validity of the amendment to Article III expanding the board, and (iii) the election of Frankino’s nominees to the expanded board.

## Legal Principles

- Supermajority voting requirements that restrict default majority rule must be created by clear, express language; courts will not infer such restrictions from purpose or presumed intent.
- A bylaw that expressly imposes a supermajority requirement to amend a different bylaw provision does not, without express text, impose the same supermajority requirement for amendments to itself.
- Stockholders may amend bylaws by majority vote (including by written consent) absent a valid, express supermajority or other controlling restriction; once an express supermajority provision is lawfully removed, subsequent majority amendments and related director elections taken in reliance on the removal are effective.

## Conclusion

The court confirmed that, where bylaws recognize supermajority requirements only if expressly stated, a majority stockholder may repeal a supermajority bylaw by majority written consent when that bylaw does not expressly protect itself from majority amendment, and may then validly amend board-related bylaws and elect directors pursuant to the resulting changes.


Frankino v. Gleason, 1999 WL 1032773 (Del. Ch. Nov. 5, 1999)