On April 6, Delaware Gov. John Carney issued the Tenth Modification of the Declaration of a State of Emergency for the State of Delaware Due to a Public Health Threat (Emergency Order), arising from the COVID-19 epidemic. To increase flexibility for Delaware corporations with respect to stockholder meetings that may occur before the COVID-19 health threat is resolved, section 4 of the Emergency Order permits public Delaware corporations to take the following actions:

• The corporation may change a stockholder meeting currently noticed for a physical location to be conducted solely by remote communication.

• If it is impracticable to convene a currently noticed stockholder meeting at the physical location where it was noticed due to the COVID-19 health threat, the corporation may adjourn the meeting to another date or time, to be held by remote communication.

A corporation that elects to take either of these actions may notify stockholders of the change or adjournment by (1) filing an appropriate document publicly with the Securities and Exchange Commission (SEC) and (2) issuing a press release and promptly posting the release on the corporation’s website. The corporation may also notify stockholders by other means provided in its charter or bylaws and authorized by the Delaware General Corporation Law (DGCL).

The Emergency Order also contains a “savings clause” that states, if any provision of section 4 is held invalid or unenforceable under the Delaware’s Constitution or other law, that invalidity or unenforceability will not affect any other provision of section 4 or other provisions of the Emergency Order.

The Emergency Order does not state that it impacts other sections of the DGCL, including a board’s option to set a record date in advance of a stockholder meeting, as permitted by section 213(a), or the notice provisions of sections 222 and 232.¹ In particular, the Emergency Order does not require corporations to set a new record date before reconvening the meeting following an adjournment, as permitted by section 213(a). But if a new record date is set, the Emergency Order appears to permit notice of the adjourned meeting to be provided through the SEC filing and press release.

Although the Emergency Order provides Delaware corporations additional freedom in these uncertain times, before taking action to alter or adjourn stockholder meetings, companies should also consider the SEC guidance discussed here, as well as the following:

• Confirm that the notice for the alteration or adjournment meets all other notice provisions of the DGCL, including sections 222 and 232.

• If a public company has already filed its proxy statement, it should ensure that it complies with all amendment and other SEC requirements that may arise as a result of the adjournment, particularly if a new record date is set.

• Adjourning a stockholder meeting and setting a new record date may give stockholders the opportunity to seek to submit new proposals in advance of the reconvened meeting. Companies should consider whether adjournments will reset stockholder submission deadlines in their bylaws.

The authority offered by the Emergency Order is another example of Delaware’s long-standing policy of giving corporations appropriate autonomy to conduct their affairs. As the full extent and impact of the COVID-19 public health threat remains unknown, the Emergency Order grants corporations added flexibility to promote the health and safety of stockholders, employees and the corporations themselves.

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