2010 Amendments to the Delaware General Corporation Law (DGCL)

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.

[These Amendments were signed into law on June 10,2010, by the Governor and will be effective August 2, 2010]

The Delaware Bar each year proposes to the Delaware General Assembly updates to its major business statutes, the DGCL, LLC Act and DRULPA. This year the Bar has proposed two bills to amend the DGCL. The first bill has been introduced as HB 341 which is a major rewrite of the DGCL dealing with non-stock corporations organized either for profit or as a not-for-profit corporation, either with a charitable purpose or a non-charitable purpose. HB 341 was a herculean undertaking by the drafting committee and they should be congratulated for their efforts. In a report which accompanied the draft the Committee reported that nonstock corporations, “their second-class status in the DGCL may leave practitioners unable to provide complete, confident legal guidance regarding their governance”. The Blackline of Revisions to DGCL contains the entire DGCL and shows the black lined changes being made as a result of HB 341. [HB 341 was signed into law on May 3, 2010, with an effective date of August 1, 2010.]

The second group of amendments are contained in HB 375 which are the general 2010 DGCL amendments. Section 23 of the Bill adds a new Section 267 to the DGCL which permits a short form merger between a subsidiary Delaware corporation and a LLC or other entity parent. The LLC amendments contained in a recent post reflect the LLC Act side of the DGCL amendment.

Sections 1-3 and 16-17 of the Bill reflect the addition of new Section 267.

Section 4 amends Section 132(b) to confirm that the provision setting requirements to serve as a registered agent apply to registered agents for both domestic and foreign corporations.

Section 5 amends Section 145(d) dealing with the decision to indemnify a person who is a present or former director, officer, employee or agent and clarifies that the decision is made by specified decision making bodies of the corporation providing the indemnification.

Section 6 amends Section 145(e) by striking the subsection in its entirety and adds a new subsection (e). The amendment is intended to clarify that the first sentence is intended to apply to advancements of expenses provided to a current officer or director of the corporation. The second sentence provides that the corporation may provide an advancement of expenses to other specified persons “upon such terms and conditions, if any, as the corporation deems appropriate”.

Section 7 amends Section 242(b)(1). The current Section provides in part that the notice of the proposed amendment to the stockholders shall set forth such amendment in full or in a brief summary “as the directors deem advisable”. The amendment deletes the quoted language so that the decision to provide the amendment or a summary may be made by others.

Sections 8, 10-11, 14, 18 & 20 clarify that in the case of a merger, the certificate of incorporation of the surviving corporation may be “amended and restated in its entirety” rather than just “such amendment or changes … as are desired to be affected.”

Section 9 amends Section 251(c) dealing with sending either the agreement of merger or a summary of the agreement to stockholders in a manner similar to the amendment to Section 242(b)(1) in Section 7 of the Bill.

Sections 12, 15, 19, 21-22, 27, & 30-35 amend various section of the DGCL to permit service of process upon the Secretary of State by “means of electronic transmission” pursuant to rules to be adopted by the Secretary.

Section 13 amends Section 253(a) dealing with short form mergers between a corporate parent and its subsidiary or subsidiaries in view of new Section 267(a).

Sections 24 & 25 require that a certificate of dissolution filed under either Section 274 or 275(d) must contain the date of filing of the corporation’s original certificate of incorporation with the Secretary of State.

Section 26 amends Section 278 to confirm that sections 279-282 dealing with the dissolution of a corporation also apply to corporations which have expired by their own terms.

Section 28 amends Section 371(b)(1) to require that the application of a foreign corporation to register must be accompanied by a good standing certificate issues within 6 months of the application.

Section 29 amends Section 371(b)(2) to expand the types of entities which may serve as a registered agent for a foreign corporation.