Richards Layton & Finger
 

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

April 2018

Legislation proposing to amend the General Corporation Law of the State of Delaware (DGCL) has been released by the Corporate Council of the Corporation Law Section of the Delaware State Bar Association and, if approved by the Corporation Law Section, is expected to be introduced to the Delaware General Assembly. If enacted, the amendments would, among other things: (1) amend Section 262 to apply the “market out” exception to the availability of statutory appraisal rights in connection with an exchange offer followed by a back-end merger consummated without a vote of stockholders pursuant to Section 251(h); (2) clarify and confirm the circumstances in which corporations may use Section 204 to ratify defective corporate acts; (3) allow nonstock corporations to take advantage of Sections 204 and 205, including for the ratification or validation of defective corporate acts; (4) revise Section 102(a)(1) to provide that a corporation’s name must be distinguishable from the name of (or name reserved for) a registered series of a limited liability company; and (5) make other technical changes.

If enacted, the amendments to Section 262 (relating to statutory appraisal rights) would be effective only with respect to a merger or consolidation consummated pursuant to an agreement entered into on or after August 1, 2018; the amendments to Section 204 (relating to defective corporate acts) would be effective only with respect to defective corporate acts ratified or to be ratified pursuant to resolutions adopted by a board of directors on or after August 1, 2018; the amendments to Section 102(a)(1) (relating to the requirements of the corporation’s name) would be effective August 1, 2019; and all other amendments would be effective August 1, 2018.