The 2023 amendments to the General Corporation Law of the State of Delaware (the “DGCL”) have become effective. These amendments make important changes that include:
- reducing or eliminating stockholder approval requirements for certain charter amendments subdividing and combining issued shares and changing the authorized number of shares under Section 242 of the DGCL;
- allowing certain sales, leases, or exchanges of collateral assets securing a mortgage or pledge without obtaining stockholder approval under Section 271 of the DGCL;
- reducing the stockholder approval standard under Section 390 of the DGCL for a domestication, transfer, or continuance from unanimous to majority, and allowing appraisal for such transactions;
- simplifying the procedure for certain ratifications of defective corporate acts;
- clarifying provisions for issuance of stock options and notice of stockholder action by consent; and
- permitting plans of conversion into or by a Delaware corporation and domestication by a Delaware corporation.
Although these changes do not represent all of the amendments, this GT Update discusses the impact of the legislation on corporate and M&A documents, including charter documents that are filed with the State of Delaware, bylaws, stock option issuance resolutions, stockholder notices, and new plans of conversion and domestication, and certain related drafting considerations.