2009 Delaware Corporation Law Amendments

Steven D. Goldberg, Esq. Wilmington, DE
sgoldberg@stevendgoldberg.com
http://www.stevendgoldberg.com
Contact me if you need assistance in forming/organizing a Delaware business entity or any matter of Delaware law. Delaware Forms and Publications are available at http://www.delawarellclaw.com

This Blog is about Delaware LLC law, and there will be some minor amendments to the Act introduced in the Delaware Legislature this year, however substantial amendments to the Delaware General Corporation Law (DGCL) were signed into law on April 10, 2009. This Blog is quick review of those amendments. Click here to see the amended sections of the DGCL. 2009-dgcl-amendments

In a recent decision by the Delaware Supreme Court upon a question certified to it by the SEC, the Court held that a bylaw which permitted nominations of directors, access to the company’s proxy materials and reimbursement of proxy expenses under certain circumstances would not violate the DGCL. New Section 112 and 113 implement that decision.

In another Delaware decision the Court of Chancery upheld the right of a corporation to change the indemnification rights of a former director prior to the director asserting a right to indemnification. The amendment to Section 145(f) creates a default rule that the right to indemnification or advancement for expenses under a bylaw or the certificate cannot be changed after the occurrence of the event that gave rise to the claim for indemnification. As with most default rules in Delaware they may be changed, in this case the bylaw or certificate in effect at the time of the event may “authorizes such elimination or impairment after such action or omission has occurred.”

Section 225(c) is new and give the Court of Chancery the power to remove a director under limited emergency circumstances.

To Comply with SEC rules and to eliminate voting by persons who may no longer have an ownership interest in a company, the amendments to Sections 213, 211, 219, 222, 228, 262 and 275 authorize the Board to designate different record dates for notices to stockholders and voting by stockholders to bring those dates closer to the date of the meeting.

The amendment to Title 10, Section 3114(c) eliminates the need for duplicate notices to directors or officers in those cases where no residence address appears or when the last known address is the address of the corporation.