Senate Bill 69
149th General Assembly (2017 - 2018)
The General Assembly has ended, the current status is the final status.
AN ACT TO AMEND TITLE 8 OF THE DELAWARE CODE RELATING TO THE GENERAL CORPORATION LAW.
Section 1. Sections 1, 2, 5, 6, 7, 11 and 36 of this Act amend Sections 151(f), 202(a), 219(a), 219(c), 224, 232(c) and 364 of Title 8, respectively. Amendments to Sections 219, 224 and 232 and related provisions are intended to provide specific statutory authority for Delaware corporations to use networks of electronic databases (examples of which are described currently as “distributed ledgers” or a “blockchain”) for the creation and maintenance of corporate records, including the corporation’s stock ledger. Section 219(c), as amended, now includes a definition of “stock ledger.” Section 224, as amended, requires that the stock ledger serve three functions contemplated by the Delaware General Corporation Law: it must enable the corporation to prepare the list of stockholders specified in Sections 219 and 220; it must record the information specified in Sections 156, 159, 217(a) and 218; and, as required by Section 159, it must record transfers of stock as governed by Article 8 of subtitle I of Title 6. Sections 151, 202 and 364 are also amended to clarify that the notices given to holders of uncertificated shares pursuant to those sections may be given by electronic transmission. Section 2. Sections 3 and 4 of this Act amend Section 203(b) of Title 8. The amendments to Section 203(b)(3) clarify that an amendment to the corporation’s certificate of incorporation opting out of the restrictions on business combinations under that section becomes effective at the date and time such amendment becomes effective under Section 103 (in the case of a corporation that has never had a class of voting stock listed on a national securities exchange or held of record by more than 2,000 stockholders and that has not elected through its original certificate of incorporation or any amendment thereto to be governed by Section 203) or 12 months after the effective date of such amendment (in the case of all other corporations), rather than, in each case, the time at which the amendment is adopted by stockholders. The amendment to the last sentence of Section 203(b) adopts the same language with respect to the effectiveness of an amendment as added in Section 203(b)(3). Section 3. Sections 8, 9 and 10 of this Act amend Sections 228(c), 228(d) and 228(e) of Title 8, respectively. Section 228 is amended to provide that a consent need not bear the date of signature of the stockholder or member signing the consent. The amendments to Section 228(c) also provide that the sixty-day period for the delivery of consents will start on the first date a consent is delivered to the corporation. The amendments eliminate surplus language that specified where consents had to be delivered. Section 4. Sections 12 through 35 of this Act amend the provisions on mergers and consolidations in subchapter IX of chapter 1 of Title 8. Sections 254, 263 and 264 are amended to permit mergers of Delaware corporations with joint-stock or other associations, limited liability companies and partnerships formed or organized under the laws of a non-US jurisdiction. Sections 252, 253, 258 and 267 are amended to use the term “foreign corporation” (as such term is defined in Section 371(a)) to refer consistently to mergers with a corporation organized under the laws of any jurisdiction other than the State of Delaware. Sections 255 and 256 are amended to clarify how membership interests in a non-stock corporation may be treated in a merger and, as a result, redundant language to this effect in Section 257 is eliminated. All sections relating to mergers are amended to conform language to eliminate inconsistencies. The term “organized” is used with respect to corporations and refers to the method by which a corporation is formed, incorporated, created or otherwise comes into being under the laws governing its internal affairs. The term “formed” is used with respect to non-corporate entities and includes the method by which a non-corporate entity is formed, created or otherwise comes into being under the laws governing its internal affairs. Both terms are used with respect to joint stock associations given that the manner in which they are characterized may, depending upon the law at issue, include attributes of both “organized” and “formed”. The clarification of the terms used to refer to corporations and non-corporate entities and the elimination of the term “existing” from Section 251 are for clarification purposes only and do not change the intent of such sections prior to the amendments. Each of the statutes on mergers and consolidations involving Delaware corporations and non-Delaware entities is amended to provide that such mergers and consolidations are permitted so long as the laws of the applicable non-Delaware jurisdictions do not prohibit the transaction. These amendments change provisions of Sections 252, 253, 256 and 258 that permitted these mergers and consolidations under Delaware law only if the applicable non-Delaware law “permitted” the transaction and change the language of Sections 254, 263, 264 and 267 from not “forbid” to not “prohibit”. The amendments are intended to further facilitate mergers and consolidations of Delaware corporations with non-Delaware entities. Section 5. Sections 37 and 38 of this Act amend Sections 374 and 502(a) of Title 8, respectively. Section 502 is amended to clarify the information required to be disclosed in annual reports filed by domestic corporations with the Office of the Secretary of State of the State of Delaware. Section 374 is amended to conform the annual reporting requirements for corporations formed in another jurisdiction and qualifying to do business in Delaware with the requirements for domestic corporations. The amendments will allow for seamless electronic integration and more efficient processing of these annual reports. Section 6. Sections 39 and 40 of this Act relate to the effectiveness of the amendments to Title 8. Section 40 of this Act provides that Sections 8 through 10 of this Act (relating to the amendments to Section 228 of Title 8) are effective only for stockholder and member actions taken by consent having a record date, for purposes of determining the stockholders or members entitled to consent, on or after August 1, 2017. Section 39 of this Act provides that Sections 1 through 7 and Sections 11 through 38 of this Act (relating to the remaining amendments to Title 8 set forth in this Act) are effective on August 1, 2017.