As part of the annual process of reviewing and updating the Delaware General Corporation Law (“DGCL”), Delaware’s state legislature recently approved 2024 amendments. In summary, these include the following changes:

• Amendments to Section 122 to provide that a corporation has the power to contract with stockholders to take or not take certain actions, or to subject certain actions to specific approval requirements. The amendments are to confirm that, under the DGCL, such provisions need not be included in a certificate of incorporation to be validly authorized.
• New Section 147 to facilitate boards of directors’ approval of agreements, documents, or instruments by stating they may be approved in substantially final form. New Section 147 also provides that boards of directors may ratify their approvals after the fact.
• Amendments to Sections 232 to clarify that, for purposes of providing stockholders notices required under the DGCL, documents sent to stockholders with the notice are deemed included therein.
• New Section 261 to confirm that parties to a merger agreement may contract for remedies in the event of a breach, which may include “lost premium” damages. New Section 261 also permits merger agreements to appoint representatives with the exclusive authority to act for stockholders of constituent corporations with respect to enforcing stockholders’ rights thereunder.
• New Section 268 to facilitate the approval of merger agreements by providing that, in the event merger consideration to a constituent corporation’s stockholders does not include shares in the surviving corporation, then the DGCL does not require either the constituent corporation’s board of directors or its stockholders to approve the certificate of incorporation of the surviving corporation. New Section 268 also facilitates the approval of merger agreements by providing that under the DGCL, unless otherwise agreed, directors and stockholders need not approve final or substantially final disclosure schedules, which instead may be completed by officers or agents at the direction of the board.

Here is a link to a redline of the full bill, showing the changes being made, and its explanatory synopsis. If signed into law by Delaware’s governor, the amendments are proposed to become effective as a general matter on August 1, 2024. They will apply to all agreements, documents, or instruments entered into before or after that date, except that the amendments will not affect any pending civil actions.

Originally Published on American Bar Association, Business Law Today