2018 Proposed Amendments to the General Corporation Law of the State of Delaware

April 2018

Publication| Corporate Transactions| Corporate & Chancery Litigation

Legislation proposing to amend the GeneralCorporation Law of the State of Delaware(DGCL) has been released by the CorporateCouncil of the Corporation Law Section ofthe Delaware State Bar Association and, ifapproved by the Corporation Law Section,is expected to be introduced to the DelawareGeneral Assembly. If enacted, the amendmentswould, among other things: (1) amendSection 262 to apply the “market out” exceptionto the availability of statutory appraisalrights in connection with an exchange offerfollowed by a back-end merger consummatedwithout a vote of stockholders pursuant toSection 251(h); (2) clarify and confirm thecircumstances in which corporations mayuse Section 204 to ratify defective corporateacts; (3) allow nonstock corporations to takeadvantage of Sections 204 and 205, includingfor the ratification or validation of defectivecorporate acts; (4) revise Section 102(a)(1)to provide that a corporation’s name must bedistinguishable from the name of (or namereserved for) a registered series of a limitedliability company; and (5) make other technicalchanges.

If enacted, the amendments to Section262 (relating to statutory appraisal rights)would be effective only with respect to amerger or consolidation consummated pursuantto an agreement entered into on orafter August 1, 2018; the amendments toSection 204 (relating to defective corporateacts) would be effective only with respectto defective corporate acts ratified or to beratified pursuant to resolutions adopted bya board of directors on or after August 1,2018; the amendments to Section 102(a)(1)(relating to the requirements of the corporation’sname) would be effective August 1,2019; and all other amendments would beeffective August 1, 2018.

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