CORPORATIONS--DIRECTORS--APPLICATION TO NEWLY CREATED DIRECTORSHIPS OF STATUTORY PROVISIONS FOR FILLING VACANCIES

Only thirteen states have statutes specifying who may fill directorships created by an increase in the board. However, twenty-eight others provide by statute that the board is or may be empowered to fill vacancies. The question whether such a provision permits the board to fill directorships arising on an increase in the board was before the Delaware court in the recent case of Johnston v. Automatic Steel Products, Inc. The by-laws specified that an increase in the board created vacancies which the board could fill. The board acted thereunder, and this action and the by-law were challenged.

The court held that "vacancies" as used in the Delaware statute did not encompass newly created directorships, and that the shareholders could not empower the board to fill these positions without statutory authority. As the construction of the term "vacancies" is an open question in twenty-five of the states an examination of the question seems fitting.