Corporate & Securities Blog

If you haven’t updated your copy of the Delaware business entities statute, you should consider doing so as it is officially out of date as of August 1. Amendments to the Delaware General Corporation Law address appraisal rights, back-end mergers after a tender offer, the jurisdiction of the Delaware Court of Chancery and default voting and quorum requirements for boards and committees.

In an effort to limit de minimis appraisal claims, the appraisal statute now requires a court to dismiss an appraisal proceeding with respect to publicly traded securities unless (1) the total number of shares entitled to appraisal exceed 1% of the outstanding shares of the class or series entitled to appraisal or the value of the consideration provided in the merger for the shares exceed $1 million, or (2) the merger was  a short-form merger under Section 253 or 267 of the DGCL.

• Section 251(h) of the DGCL has been amended to eliminate the stockholder approval requirements on back-end mergers after a tender offer for a broader category of transactions and clarified certain other provisions of the recently enacted statute.
• Section 111 of the DGCL has been amended to broaden the Chancery Court’s subject matter jurisdiction to include civil actions involving stock purchase agreements and other documents and instruments pursuant to which a stockholder sells stock or pursuant to which property or assets of a Delaware corporation are sold and at least one stockholder approves or consents to the sale.
• Section 141 has been amended to specify default voting and quorum requirements for board committees and subcommittees.

Certain technical amendments to the Delaware LLC Act, the Delaware Revised Uniform Partnership Act and the Delaware Revised Uniform Partnership Act may also impact your organization. A complete copy of the text of the amendments can be found here.