The Delaware General Assembly has proposed amendments to the Delaware General Corporation Law (the DGCL). These proposed amendments would make important changes that include:
- allowing for an exculpatory charter provision to limit personal liability of senior officers;
- allowing beneficial owners, instead of record holders, to directly assert appraisal rights;
- extending appraisal rights to stockholders in connection with a conversion of a Delaware corporation to a foreign corporation or to any other entity; and
- revising requirements related to stock and option issuances and notices and stockholder lists for stockholder meetings.
This proposed legislation will impact corporate and M&A documents, including charter documents that are filed with the State of Delaware, bylaws, appraisal notices, stock and option issuance resolutions, stockholder consents, new plans of domestication, and annual franchise tax reports. Although these amendments remain subject to adoption by the legislature and the governor and will not be effective until August 1, 2022, if adopted, counsel should budget sufficient lead time prior to August 1, 2022, to review and prepare changes to such documents and for relevant parties to approve. This GT Update outlines certain considerations related to drafting and revising those corporate and M&A documents, while encouraging boards, investors, and counsel to take a thoughtful approach to these amendments and such revisions.