Delaware Adopts Key Changes to Delaware General Corporation Law
April 20, 2009
On April 10, 2009, the Delaware governor signed into law amendments to the Delaware General Corporation Law dealing with proxies and stockholder meetings, among other items. This law becomes effective on August 1, 2009. The amendments provide for changes in the following key areas:
- Access to Proxy Solicitation Materials (new Sec. 112) – permits, but does not require, a Delaware corporation's bylaws to provide that, if the corporation solicits proxies for an election of directors, the slate of director nominees presented in the corporation's proxy solicitation materials must include stockholder-nominated director nominees, in addition to board-nominated director nominees, subject to the nominating stockholders' compliance with any conditions or procedures set forth in the corporation's bylaws.
- Reimbursement of Proxy Expenses (new Sec. 113) – permits, but does not require, a Delaware corporation's bylaws to provide that the corporation will reimburse a nominating stockholder for any reasonable expenses they incur in soliciting proxies for the election of directors, subject to the nominating stockholders' compliance with any conditions or procedures set forth in the corporation's bylaws.
- Greater Indemnification and Expense Advancement Rights (amended Sec. 145(f)) – prohibits a Delaware corporation from amending its certificate of incorporation or bylaws to eliminate or impair rights to indemnification or advancement of expenses after an act or omission occurs, which act or omission leads to directors and/or officers seeking indemnification or advancement in connection with a related legal action, unless the certificate of incorporation or bylaws in effect at the time of such act or omission provides for retroactive elimination or impairment of these rights.
- Separate Record Dates (amended Sec. 213(a)) – permits, but does not require, a Delaware corporation's board to fix one record date for stockholders entitled to notice of a meeting (no more than 60, nor less than 10 days before the meeting date) and a separate record date for determining the stockholders entitled to vote at the meeting, in an effort to reduce the issues that arise when a stockholder continues to have voting rights in a company after such stockholder no longer owns stock in the company.
- Judicial Removal of Convicted Directors (amended Sec. 225(c)) – permits a Delaware corporation (or its stockholders through a derivative action) to petition the Court of Chancery to remove directors who have been convicted of a felony either (1) in connection with their duties as a director of the corporation or (2) if a court previously found the director to have breached his or her duty of loyalty to the corporation.
145th General Assembly House Bill # 19 (document)
145th General Assembly House Bill # 19 (html)
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