CORPORATIONS-ELECTION OF DIRECTORS-POWER TO ENJOIN SHAREHOLDERS' MEETING UNTIL SHAREHOLDERS ARE FURNISHED INFORMATION CONCERNING CONDITION OF CORPORATION

Authors

Robert W. Shadd, University of Michigan Law SchoolFollow

Abstract

Defendant company was operating at a loss of approximately $50,000 per month; the directors delayed three months in reporting the financial affairs of the company; and the shareholders' meeting was delayed six months in violation of the by-laws. On January 24, 1948, the directors called an election meeting for February 16, 1948. On receipt of this notice, plaintiff and others formed an independent shareholders' committee to effect a change in management. The directors refused to allow the plaintiff to make a photostatic copy of the list of 3,080 shareholders, but did permit him to inspect the list five days before the meeting, as required by Pennsylvania law. Plaintiff's committee secured proxies from about seven hundred shareholders who were previously unaware of the true condition of the company, but lacked time to contact some four hundred others before the meeting date. Plaintiff petitioned for an interlocutory injunction, requesting additional time to give his committee an opportunity to secure proxies from the rest of the shareholders. Held, injunction granted. Steinberg v. American Bantam Car Co., (D.C. Pa. 1948) 76 F. Supp. 426.