Coster v. UIP Companies, Inc.

Summary

The Supreme Court of Delaware affirmed the Court of Chancery’s decision upholding UIP’s dilutive stock issuance to break a director-election deadlock and moot a custodian action. The court held that enhanced scrutiny applies when board action interferes with a corporate election or stockholder voting rights in a contest for control, requiring the board to identify a real, non-pretextual threat, act for proper reasons, and tailor a non-preclusive or non-coercive response. Applying that framework, the court concluded that the board’s response was properly motivated, reasonably related to threats to UIP’s business, and supported by the record. No separate opinions were issued.