Daily Report for 7/17/2024

Governor's Actions

BillCurrent StatusSponsorSynopsisTitle
HB 333 w/ HA 1 + SA 1SignedGriffithThis Act creates the Delaware Artificial Intelligence ("AI") Commission. This Commission shall be tasked with making recommendations to the General Assembly and Department of Technology and Information on AI utilization and safety within the State of Delaware. The Commission shall additionally conduct an inventory of all Generative AI usage within Delaware's executive, legislative, and judicial agencies and identify high risk areas for the implementation of Generative AI. The Commission will terminate 10 years from enactment unless extended by the General Assembly.AN ACT TO AMEND TITLE 29 OF THE DELAWARE CODE RELATING TO THE ARTIFICIAL INTELLIGENCE COMMISSION.
SB 234SignedHansenThis bill will extend the timeframe for a customer to apply for a document fee credit refund from 15 days to 30 days. This change will improve customer service by allowing a customer more time to submit the applicable paperwork.AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO EXTENDING THE TIMEFRAME TO APPLY FOR A DOCUMENT FEE REFUND FROM 15 DAYS TO 30 DAYS.
SB 236 w/ HA 1SignedHansenThis bill: (a) extends the expiration date for any new issuance or renewal of an ADA placard from 3 years to 8 years for a specific person with a diagnosis of a permanent disability and changing the minimum age from 85 to 80 years or older, (b) extends the validity for a temporary disability from 5 weeks to 180 days, and (c) defines additional medical professionals acceptable to certify a disability application.AN ACT TO AMEND TITLE 21 OF THE DELAWARE CODE RELATING TO LICENSE PLATES AND PARKING PERMITS.
HB 334 w/ HA 1SignedOsienskiThis Act makes several technical and logistical corrections to the Delaware Marijuana Control Act. Section 1 of this Act authorizes the Division of Alcohol and Tobacco Enforcement to conduct administrative inspections of premises licensed under Title 4 for the purpose of ensuring compliance with the provisions of Title 4, the rules and regulations of the Alcohol Beverage Control Commissioner, or the rules and regulations of the Marijuana Commissioner. Section 2 of this Act creates definitions for the terms “conditional license” and “flowering plants.” Section 3 of this Act changes the permissible hours of operation of a marijuana facility from 9 a.m. through 1 a.m. to 9 a.m. through 10 p.m. on Mondays through Saturdays. Section 4 of this Act gives enforcement powers to the Division of Alcohol and Tobacco Enforcement and permits administrative inspections of premises licensed under Chapter 13 of Title 4. Section 5 of this Act removes the power of the Commissioner to create rules and regulations to gather consumer data to track compliance with possession limits. Section 6 of this Act makes the following changes to the application selection process: (1) it removes the requirement that the process be varied to account for geographic distribution or population density; (2) it removes a requirement for an applicant to provide information as to the suitability of the proposed location for the facilities; (3) it removes the requirement for an attestation signed by a bona fide labor organization that the applicant has entered a labor peace agreement with the organization (this requirement is instead moved to the criteria for conditional licensure in Section 13 of this Act); (4) it moves the requirement for the creation of identification badges from marijuana establishments to the Commissioner and permits the Commissioner to require a fee for each badge; (5) requires that employees complete training approved by the Commissioner in recognizing valid identification cards; and (6) specifies that agents of a marijuana establishment are subject to all standards and requirements of regulations adopted by the Commissioner. Section 7 of this Act removes a provision for retail store licenses that specifies that a properly registered compassion center that is issued a retail marijuana store license is considered a business registration separate and distinct from the compassion center registration. It also removes the ability for a licensee or employee of a retail marijuana store to detain and question an individual that the employee believes is under 21 years old and is believed to be exhibiting fraudulent identification to attempt to obtain retail marijuana or a retail marijuana product. Section 8 of this Act corrects a typographical error and clarifies the definition of a cannabis plant grow canopy area. Section 9 of this Act changes the criteria for social equity applicants to remove a Delaware residency requirement and add that a marijuana-related conviction or adjudication of delinquency must have been under the laws of Delaware. Section 10 adds a source of funding that the Commissioner is to investigate that may support social equity applicants. Section 11 of this Act removes a prohibition on microbusiness applicants from possessing more than 1,000 marijuana plants each month and a Delaware residency requirement. Section 12 of this Act repeals a provision allowing for the grant of a conditional license to microbusiness applicants, as in Section 13 of this Act, a new section 1345 of Title 4 authorizes the grant of conditional licenses to applicants who meet specified criteria for licensure. Section 13 of this Act makes technical corrections to conform to the standards of the Delaware Legislative Drafting Manual, prohibits the grant of multiple licenses of any type where the grant would result in the applicant or other person with a financial interest in the application owning more than one business entity of the license type, authorizes the Commissioner to grant a conditional license to any applicant, specifies criteria that must be met for the Commissioner to grant an active license, details requirements for background checks, and makes information received by the Commissioner during the application or background check process confidential and exempt from the Delaware Freedom of Information Act. Section 14 of this Act limits the prohibition on the transfer of social equity licenses to people who would not meet the criteria for the issuance of a social equity license so that licensees may transfer such licenses after three years. Section 15 of this Act adds support for social equity applicants with select business-related expenses to the list of areas for which funding from the Justice Reinvestment Fund is to be appropriated to administer grants, contracts, services, or initiatives. Section 16 of this Act makes changes to Title 30 relating to taxes on retail marijuana establishments. This Act also makes technical corrections to conform to the standards of the Delaware Legislative Drafting Manual. This Act requires passage by a 3/5 majority because it authorizes the Commissioner to charge a fee for identification badges. AN ACT TO AMEND TITLES 4 AND 30 OF THE DELAWARE CODE RELATING TO MARIJUANA.
SB 239 w/ SA 1SignedWalshThis Act removes the 5-year term limit imposed upon hearing officers appointed by the Secretary of Labor. It also removes the political party affiliation rule when considering new candidates for the hearing officer position. The Act removes references to reappointments and clarifies that the removal of a hearing officer is made consistent with the State Merit Rules. This Act also makes technical corrections to conform existing law to the standards of the Delaware Legislative Drafting Manual. AN ACT TO AMEND TITLE 19 OF THE DELAWARE CODE RELATING TO HEARING OFFICERS WITHIN THE DEPARTMENT OF LABOR.
HS 1 for HB 19SignedMorrisonThis Act creates a background special license plate for the United Way of Delaware Pride Council. A background special license plate supports a cause and is available for purchase by the public at large, including members of the organization. The numbers, letters, or both, assigned will be the same as the license plate assigned to the owner’s vehicle at the time of the application for the plate. This Act requires a greater-than-majority vote for passage because Article VIII, § 11 of the Delaware Constitution requires the affirmative vote of 3/5 of the members elected to each house of the General Assembly when a new tax or license fee is imposed.AN ACT TO AMEND TITLE 21 OF THE DELAWARE CODE RELATING TO SPECIAL LICENSE PLATES.
SB 302SignedWilsonThis Act allows a licensed brewery-pub located within the premises of a public golf courses to apply to the Commissioner for a license to sell alcoholic beverages to patrons of the golf course if the brewery-pub and public golf course share common ownership.AN ACT TO AMEND TITLE 4 OF THE DELAWARE CODE RELATING TO BREWERY-PUBS.
SS 1 for SB 228SignedLawsonThis Act is a substitute for Senate Bill No. 228. This Act achieves the intent of Senate Bill No. 228 by providing an exception to the general prohibition against semiautomatic pistols that have the ability to accept detachable ammunition magazines that attach at some location other than the pistol grip. This exception permits such a characteristic in the limited circumstance of using a rimfire pistol for competitive shooting or for practice shooting in preparation for competitive shooting. The characteristic is still prohibited outright for any centerfire pistols.AN ACT TO AMEND TITLE 11 OF THE DELAWARE CODE RELATING TO SEMIAUTOMATIC PISTOLS.
HB 397SignedMatthewsThe purpose of this Act is to reduce the cost to the State in addressing ownership of land encumbered by public right-of-way permanent easements when the land has been abandoned by a prior owner and a current owner cannot be located. This Act will allow the Department, in the name of the State, to obtain fee simple ownership of land encumbered by right-of-ways, previously conveyed to the Department by permanent easement, when such right-of-ways are part of a current Department project. This Act requires the Department to promulgate regulations to establish the procedures for establishing that the land has been abandoned and for recording its fee simple ownership of the land.AN ACT TO AMEND TITLE 17 OF THE DELAWARE CODE RELATING TO THE ESTABLISHMENT OF DEPARTMENT OF TRANSPORTATION OWNERSHIP OF ABANDONED LAND ENCUMBERED BY THE DEPARTMENT’S RIGHT-OF-WAY EASEMENTS.
HB 401SignedLambertThis Act amends Section 2603 of Title 16 to require the Division of Public Health to provide the results of lead screenings or tests to school nurses and require contracts or computer upgrades to include lead results. AN ACT TO AMEND TITLE 16 OF THE DELAWARE CODE RELATING TO LEAD SCREENING OR TEST RESULTS.
HB 407SignedMatthewsThis Act establishes an application process, policies, procedures, operational instructions, and requirements for licensed transporters to obtain and use transporter license plates when transporting vehicles. This Act requires a greater-than-majority vote for passage because Article VIII, § 11 of the Delaware Constitution requires the affirmative vote of 3/5 of the members elected to each house of the General Assembly when a new tax or license fee is imposed.AN ACT TO AMEND TITLE 21 OF THE DELAWARE CODE RELATING TO LICENSED TRANSPORTERS.
HB 408 w/ HA 1, HA 2SignedOsienskiThis Act creates a temporary conversion license for existing medical marijuana compassion centers to operate for recreational marijuana purposes, and sets forth requirements to obtain a conversion license and to operate under such a license. This Act also specifies that conversion licenses may not be issued after November 1, 2024 and expire after 48 months, at which time the license may be renewed as an open license.AN ACT TO AMEND TITLE 4 OF THE DELAWARE CODE RELATING TO MARIJUANA CONVERSION LICENSES.
SB 306 w/ SA 1, SA 2SignedPooreThis Act makes technical changes and updates to the Delaware workplace safety program. Under current law, qualifying employers who pay $3,161 or more in annual workers' compensation premiums may be eligible for lower insurance premiums under the workplace safety program. The Act changes that criteria to employers who currently qualify for the uniform experience rating plan as approved by the Insurance Commissioner or who otherwise qualify for the program pursuant to parameters set by the Insurance Commissioner by regulation. In addition, the Act provides that in determining safety credits for a qualified employer that was not experience-rated in the policy period expiring immediately prior to application of the safety credit, the formula for calculating safety credits will incorporate amounts determined by the Insurance Commissioner by regulation.AN ACT TO AMEND TITLE 19 OF THE DELAWARE CODE RELATING TO WORKPLACE SAFETY PROGRAM.
HB 409SignedMatthewsThis Act defines a Unique vehicle as one not manufactured to meet all Federal Motor Vehicle Safety Standards (FMVSS) in effect for the model year in which it was manufactured or which does not meet the requirements of the Division of Natural Resources and Environmental Control (DNREC) emissions inspection program. It identifies the requirements for those vehicles to be titled, registered, and branded for operation within this State.AN ACT TO AMEND TITLE 21 OF THE DELAWARE CODE RELATING TO UNIQUE VEHICLES.
SS 1 for SB 304SignedSturgeonThis Act makes changes to nonacademic training requirements for school district and charter school personnel to help ensure that mandatory trainings are relevant to student needs and based on best practices. While nonacademic mandatory trainings are essential to addressing critical issues facing Delaware students, school personnel have expressed concerns related to the time burden and relevance of required trainings. Streamlining and modernizing such trainings could enhance their effectiveness and allow school personnel to spend more time meeting the needs of students. To that end, this Act makes the following changes to nonacademic training requirements for school district and charter school personnel: (1) School bullying prevention and criminal youth gang detection training hours are reduced from 3 hours every 3 years to 1 hour every 3 years, and new employees must complete 1 hour of training within 1 year of employment. (2) Suicide prevention training hours are reduced from 4½ hours every 3 years to 3 hours every 3 years, and new employees must complete 1 hour of training within 1 year of employment. (3) Teen dating violence and sexual assault training hours for school administrators, nurses, and counselors serving students in grades 7 through 12 are reduced from 2 hours every 3 years to 1 hour every 3 years, and new employees must complete 1 hour of training within 1 year of employment. This Act also directs the entities that developed these trainings to work in collaboration with the Department of Education (“the Department”) to review mandatory training programs every 3 years, at a minimum, and update the programs as necessary to ensure that they are relevant to student needs and consistent with best practices. The Department is also responsible under the Act for developing regulations that create a schedule for all trainings under § 4162 of Title 14. Senate Substitute No. 1 for Senate Bill No. 304 differs from Senate Bill No. 304 in that it requires the entities that developed the trainings to work in collaboration with the Department to review and potentially update the trainings. In contrast, Senate Bill. No. 304 would require the Department to take the lead in revising and updating trainings in consultation with these other entities. Senate Substitute No. 1 for Senate Bill No. 304 also adds an effective date for § 4163 of Title 14 at line 31, to reflect a recent change to the effective date of the statute. Senate Substitute No. 1 for Senate Bill No. 304 makes minor technical corrections to conform existing law to the standards of the Delaware Legislative Drafting Manual.AN ACT TO AMEND TITLE 14 OF THE DELAWARE CODE RELATING TO REGULATORY PROVISIONS FOR NONACADEMIC TRAINING AND RELATED RESOURCES.
HB 425SignedOsienskiThis Act moves the Office of Medical Marijuana, which is currently under the Department of Health and Social Services to the Office of the Marijuana Commissioner within the Department of Safety and Homeland Security. Under this Act, the Marijuana Commissioner, rather than DHSS, will be responsible for administering the Delaware Medical Marijuana Act, which includes the following tasks: (1) Registration and certification of safety compliance facilities and compassion centers; (2) Issuance of registry identification cards; (3) Registration of qualifying patients and designated caregivers; and (4) Updating rules and regulations under the Delaware Medical Marijuana Act. AN ACT TO AMEND TITLES 4 AND 16 RELATING TO MEDICAL MARIJUANA.
SB 313SignedTownsendSection 1. Section 1 of this Act amends § 122. New § 122(18) sets forth certain types of provisions that may be included in contracts between a corporation and its current or prospective stockholders or beneficial owners of its stock, even if those provisions are not set forth in, or referenced as a fact ascertainable in, the certificate of incorporation pursuant to § 141(a). The Court of Chancery recently observed that “[t]he expansive use of stockholder agreements suggests that greater statutory guidance may be beneficial[.]” West Palm Beach Firefighters’ Pension Fund v. Moelis & Company, 2024 WL 747180 (Del. Ch. Feb. 23, 2024) at n.272. Accordingly, new § 122(18) specifically authorizes a corporation to enter into contracts with one or more of its stockholders or beneficial owners of its stock, for such minimum consideration as approved by its board of directors, and provides a non-exclusive list of contract provisions by which a corporation may agree to: a. restrict or prohibit future corporate actions specified in the contract; b. require the approval or consent of one or more persons or bodies (including the board of directors or one or more current or future directors, stockholders or beneficial owners of stock) before the corporation may take actions specified in the contract; and c. covenant that the corporation or one or more persons or bodies (including the board of directors or one or more current or future directors, stockholders or beneficial owners of stock) will take, or refrain from taking, future actions specified in the contract. New § 122(18) also provides that the corporation may be subject to the remedies available under applicable contract law, including in connection with any breach or attempted breach of the contract. Notwithstanding any choice of law provision in the contract, the reference in the last sentence of § 122(18) to the law “governing” the contract shall be deemed to refer to the laws of this State if and to the extent choice of law principles (such as the internal affairs doctrine) so require. New § 122(18) provides bright-line authorization for contractual provisions addressing the matters listed above, and therefore would provide for a different rule than the portion of the Moelis decision in which the Court held that contract provisions of this nature must be included in the certificate of incorporation to be valid. The Court in Moelis found that provisions in a stockholder agreement that required a stockholder’s approval before the corporation could take a number of actions constituted, in the aggregate, impermissible internal governance restrictions in violation of § 141(a), and therefore those approval rights should have been included in the certificate of incorporation to be valid. New § 122(18) also includes a proviso confirming that no provision of a contract shall be enforceable against the corporation to the extent such contract provision is contrary to the certificate of incorporation or would be contrary to the laws of this State (other than § 115 of Title 8) if included in the certificate of incorporation. The proviso excludes § 115, so that corporations may enter into contracts under § 122(18) with exclusive forum and arbitration provisions that do not select the courts of this State to adjudicate claims under the contracts. New § 122(18) also provides that, for purposes of applying the proviso, a restriction, prohibition or covenant in any such contract that relates to any specified action shall not be deemed contrary to Title 8 or the certificate of incorporation by reason of a provision of Title 8 or the certificate of incorporation that authorizes or empowers the board of directors (or any one or more directors) to take such action. For example, a general recitation in the certificate of incorporation of the default provisions of § 141(a) would not be sufficient to render inoperable the provisions of § 122(18) because such recitation merely authorizes the board of directors to manage, or direct the management of, the business and affairs of the corporation. In addition, other provisions of Title 8 or the certificate of incorporation that generally or specifically empower or authorize a board of directors to authorize or take any action would not prohibit a corporation from entering into a contract with current or prospective stockholders containing provisions (i) restricting or prohibiting the corporation from taking that action, (ii) requiring the approval or consent of one or more other persons or bodies before the corporation may take that action or (iii) agreeing that the corporation (or other persons or bodies) will take, or refrain from taking, that action. However, as explained in detail below, new § 122(18) would not preclude a provision in a corporation’s certificate of incorporation, in reliance on the provisions of §§ 102(b)(1), 102(b)(4) and 102(d), that limits the authority granted to the board of directors by § 122(18). Thus, to render inoperable the provisions of § 122(18), a certificate of incorporation could state the corporation lacks the power and authority to enter into the contracts authorized by § 122(18), or could state that the corporation lacks the power and authority to authorize specific contracts, or types of contracts, that would otherwise be authorized by § 122(18). The amendments do not impact certain other principles articulated in existing case law, including the following: 1) Amended § 122(5) clarifies that management contracts and other arrangements appointing or delegating authority to an officer or agent to act on behalf of the corporation continue to be subject to § 141(a) and the related common law addressing an over-delegation of duties and authority by a board of directors. See Grimes v. Donald, 673 A.2d 1207 (Del. 1996), Politan Capital Management LP v. Masimo Corporation, C.A. No. 2022-0948-NAC (Del. Ch. Feb. 3, 2023) (transcript); In re Bally’s Grand Derivative Litigation, 1997 WL 305803 (Del. Ch. June 4, 1997). 2) New § 122(18) does not authorize a corporation to enter into contracts with stockholders or beneficial owners of stock that impose remedies or other consequences against directors if they take, or fail to take, specified actions as required by the contract or that purport to bind the board of directors or individual directors as parties to the contract. Contracts that would impose such remedies or consequences on directors or that would bind directors as parties are subject to existing law. Abercrombie v. Davies, 123 A.2d 893 (Del. Ch. 1956); Chapin v. Benwood Foundation, Inc., 402 A.2d 1205 (Del. Ch. 1979). Instead, new § 122(18) authorizes contracts that impose remedies only against the corporation, including as a result of any failure by the corporation, its board of directors, or its current or future directors, stockholders or beneficial owners of stock, to take, or refrain from taking, actions specified in the contract. If an action addressed in a covenant by the corporation requires director or stockholder approval under Title 8, that approval must still be obtained in order to effect the action pursuant to Title 8. For example, the lack of stockholder approval of an action under Title 8 requiring such approval would render specific performance of the covenant unavailable. Moreover, as noted below, even the enforceability of a claim for money damages for breach of the covenant may be subject to equitable review, and related equitable limitations, if the making or performance of the contract constitutes a breach of fiduciary duty. 3) Amended § 122(18) authorizes only contracts with stockholders and beneficial owners of stock if the contracts are supported by consideration received by the corporation and if the minimum amount of that consideration is approved by the board of directors. Accord In re infoUSA, Inc. Shareholders Litigation, 953 A.2d 963 (Del. Ch. 2007) (“[A] board is empowered to make agreements with other actors in commerce, including its own shareholders”); Unisuper Ltd. v. News Corporation, 2005 WL 3529317 (Del. Ch. Dec. 20, 2005) (noting that a board policy could be enforceable if stockholders relied to their detriment on that policy by voting to redomicile the corporation in Delaware). Accordingly, new § 122(18) would not change the outcome in cases that invalidated bylaws, and other arrangements, where consideration had not been provided to the corporation and the provisions at issue conflicted with § 141(a) of Title 8. See e.g. Quickturn Design Systems, Inc. v. Shapiro, 721 A.2d 1281 (Del. 1998) (applying § 141(a) to invalidate a provision in a stockholder rights plan, which is a nominal agreement between a corporation and a rights agent in which the corporation does not receive consideration for distributing rights to its stockholders); Carmody v. Toll Brothers, Inc., 723 A.2d 1180 (Del. Ch. 1998) (testing a stockholder rights plan for compliance with §§ 141(a) and 141(d)); CA, Inc. v. AFSCME Employees Pension Plan, 953 A.2d 227 (Del. 2008) (holding that a bylaw amendment would violate § 141(a) if adopted by stockholders, in circumstances where no new consideration was provided to the corporation in connection with a vote on the bylaw amendment). 4) New § 122(18) does not relieve any directors, officers or stockholders of any fiduciary duties they owe to the corporation or its stockholders, including with respect to deciding to cause the corporation to enter into a contract with a stockholder or beneficial owner of stock and with respect to deciding whether to perform, or cause the corporation to perform, or to breach, the contract, whether in connection with their management of the corporation’s business and affairs in the ordinary course or their approval of extraordinary transactions, such as a sale of the corporation. New § 122(18) also does not affect the case law empowering a court to grant equitable relief in respect of a contract, such as when a contract is set aside because the counterparties thereto have aided and abetted a breach of fiduciary duty or when a court reviews director actions under an enhanced form of judicial scrutiny. See e.g. Paramount Communications Inc. v. QVC Network Inc., 637 A.2d 34 (Del. 1994); ACE Limited v. Capital Re Corporation, 747 A.2d 95 (Del. Ch. 1999). Instead, the amendments are intended to promote a policy of granting such relief based on the application of equitable principles, including equitable principles relating to fiduciary duties and public policy. Corporations may continue to rely upon § 122(13) to make contracts, including contracts containing the types of provisions addressed by § 122(18), with counterparties who are not contracting with the corporation in their capacities as current or prospective stockholders and beneficial owners of stock. An amendment to the opening clause of § 122 provides that a corporation is authorized to take any of the actions specified in § 122, whether or not such actions are provided in the certificate of incorporation. This amendment clarifies existing law, other than with respect to § 122(18). Accordingly, when a certificate of incorporation is silent with respect to the matters addressed by § 122, the powers in § 122 apply to the corporation. A corporation may limit these default powers if a limitation is provided for, or referenced as a fact ascertainable in, the certificate of incorporation, in accordance with §§ 102(b)(1), 102(b)(4) and 102(d). An amendment to § 122(6) clarifies that the adoption, amendment or repeal of bylaws must be effected in accordance with § 109 of Title 8. Section 2. Section 2 of this Act enacts a new § 147, which provides that whenever Chapter 1 of Title 8 expressly requires a board of directors to approve or take other action (such as making an advisability determination or a recommendation to stockholders) with respect to an agreement, instrument or document, the agreement, instrument or document may be approved in final form or substantially final form. The Delaware Court of Chancery recently considered competing interpretations of § 251 of Title 8 as to whether a board of directors must approve an agreement of merger on final or essentially final terms. Sjunde AP-Fonden v. Activision Blizzard, Inc., 2024 WL 863290 (Del. Ch. Feb. 29, 2024) (corrected March 19, 2024). New § 147 is intended to enable a board of directors to approve an agreement, instrument or document if, at the time of board approval, all of the material terms are either set forth in the agreement, instrument or document or are determinable through other information or materials presented to or known by the board. New § 147 also provides that if the board of directors has acted to approve or take other action with respect to an agreement, instrument or document that is required by Chapter 1 of Title 8 to be filed with the Secretary of State or referenced in any certificate so filed, the board may, after providing such approval or taking such action and before making such filing, ratify the agreement, instrument or document at any time before such filing is made, and such ratification will satisfy any requirement under the statute relating to the board’s authorization, whether in terms of the manner or sequence in which it is provided. Although new § 147 may be used to ratify an agreement, instrument or document after a stockholder vote or consent, it does not, of itself, enable the board to make changes to an agreement, instrument or document that is required by the statute to be adopted by stockholders after that stockholder vote or consent is obtained. (New § 147 does not affect the board’s ability to amend an agreement, instrument or document without further vote or consent of the stockholders in circumstances where such an amendment would otherwise be permitted, including, for example, any amendment to a merger agreement accomplished in accordance with § 251(d) that does not fall within one of the enumerated categories of amendments requiring an additional vote of stockholders.) The ratification provision is available as an option to provide greater certainty in circumstances where there may be a question as to whether the agreement, document or instrument as initially approved was in substantially final form. Although a board may elect to use § 147’s procedure to ratify an agreement, document or instrument that it had previously approved in substantially final form, no such ratification is required for the valid authorization of any such agreement, document or instrument. Ratification under § 147, where available, is an alternative to ratification under §§ 204 and 205 of Title 8. Accord Activision Blizzard, Inc., 2024 WL 863290, at *5-6 (indicating “Delaware law offers solutions for missteps” and referencing §§ 204 and 205). The ratification procedure available under § 147 is in addition to any ratification or validation that may be available under §§ 204 and 205 or under the common law. As with ratification or validation under §§ 204 and 205 or under the common law, ratification under § 147 relates back to the time of the original board approval. New § 147 is not intended to, and does not, exclude any equitable remedies, nor does it alter the fiduciary duties of directors in connection with approving, taking other action with respect to, or ratifying an agreement, instrument or document. Section 3. Section 3 of this Act amends § 232. New § 232(g) provides that a notice given to stockholders is deemed to include any document enclosed with, or appended or annexed to, the notice (such as a proxy statement provided along with a notice of a stockholder meeting to approve an agreement of merger). § 251 of Title 8 requires a corporation to include either a copy of an agreement of merger, or a brief summary thereof, in a notice of a stockholder meeting to adopt the merger agreement. There are similar requirements in other provisions of Title 8. The Court of Chancery recently observed that Title 8 could be amended to indicate how this statutory notice requirement relates to proxy materials that are given to stockholders. Sjunde AP-Fonden v. Activision Blizzard, Inc., 2024 WL 863290 (Del. Ch. Feb. 29, 2024) (corrected March 19, 2024) at n.55. Amended § 232 provides that information in any document enclosed with, or appended or annexed to, a notice is incorporated in the notice. However, a document is incorporated in a notice solely for purposes of satisfying the requirements of giving notice under Title 8, the certificate of incorporation or the bylaws. Accordingly, the enclosed, appended or annexed information is not intended to be deemed “per se” material to stockholders. Amended § 232 does not affect the equitable disclosure obligations of directors or officers (or, as applicable, stockholders) with respect to any corporate action as to which notice is given. Section 4. Section 4 of this Act amends § 261 of Title 8. The amendments to § 261 address two separate topics in §§ 261(a)(1) and 261(a)(2), respectively. New § 261(a)(1) clarifies that parties to an agreement of merger or consolidation may, through express provision in the agreement, specify the penalties or consequences of a party’s failure to perform its obligations under, or comply with the terms and conditions of, such agreement before the effective time of the merger, or to consummate the merger or consolidation contemplated by such agreement. Such penalties or consequences may include an obligation to make payments to the other party if the merger or consolidation is not consummated, including damages based on the lost premium that stockholders of a constituent corporation would be entitled to receive if the merger becomes effective in accordance with the terms of the agreement and reverse termination fees. New § 261(a) provides that in the event a corporation is entitled to so receive such payment, the corporation may enforce the other party’s payment obligation, and, upon receipt of any such payment, the corporation is entitled to retain the amount of any such payment. New § 261(a)(1) is being adopted in light of the Court of Chancery’s decision in Crispo v. Musk, 304 A.3d 567 (Del. Ch. 2023), to clarify the authority under Title 8 to include in an agreement of merger or consolidation provisions for penalties or consequences (including a requirement to pay lost premium damages) upon a party’s failure to perform or consummate the merger or consolidation, regardless of any otherwise applicable provisions of contract law, such as those addressing liquidated damages and unenforceable penalties. Consistent with the Delaware General Corporation Law’s role as an enabling statute, new § 261(a)(1) confirms that constituent corporations have latitude to allocate the risk of non-performance by provisions expressly set forth in agreements of merger or consolidation. New § 261(a)(1) is not intended to, and does not, exclude any remedies otherwise available to any party at law or in equity (including without limitation, specific performance), nor does it alter the fiduciary duties of directors in connection with determining whether to approve, perform or enforce any such provision, including any provision requiring a corporation to pay a termination fee or lost premium damages under certain circumstances. New § 261(a)(2) confirms that parties to an agreement of merger or consolidation may, through express provision in the agreement, appoint one or more persons to serve as the representative of stockholders of any constituent corporation, including stockholders whose shares shall be cancelled, converted or exchanged in the merger or consolidation, and to delegate to such person(s) the exclusive authority to enforce the rights of such stockholders, such as rights to receive payments and enforce stockholders’ rights under an escrow or indemnification arrangement, and to enter into settlements with respect thereto. Any such appointment of a representative of stockholders of a constituent corporation may be made effective as of, or at any time following, the time at which the agreement of merger or consolidation is adopted by stockholders in accordance with the requirements of this subchapter, and thereafter shall be binding on all stockholders of such constituent corporation. The merger and consolidation provisions of Subchapter IX of Chapter 1 of Title 8 have for decades included provisions allowing agreements of merger or consolidation to be made dependent on facts ascertainable outside of the agreement. See Aveta Inc. v. Cavallieri, 23 A.3d 157 (Del. Ch. 2010). The “facts ascertainable” provisions set forth in several sections of subchapter IX already provide a corporation broad authorization to include in an agreement of merger or consolidation one or more provisions making the consideration received by stockholders subject to any future determinations made by, or documents entered into in the future by, a stockholder representative. Id. It has become market practice, however, to refer to a stockholders’ representative appointed in an agreement of merger or consolidation as an agent of the stockholders of the constituent corporation whose shares are cancelled and converted in the merger into the right to receive cash or other property. Accordingly, new § 261(a)(2) is intended to provide express authorization for these representative provisions, confirming that a stockholders’ representative appointed pursuant to the terms of a merger agreement may be delegated powers, exercisable after the effectiveness of the merger, in addition to the power to make adjustments in respect of the nature or amount of merger consideration. These amendments should not be construed to limit the broad authority permitted under Title 8 and recognized in opinions of the Delaware courts, including Aveta, for constituent entities to make agreements or other instruments dependent on facts ascertainable outside of the agreement or instrument. The amendments to § 261(a)(2) do not allow for a provision of an agreement of merger or consolidation empowering a stockholders’ representative to exercise powers beyond those related to the enforcement of the rights of stockholders under the agreement. Thus, for example, the amendments would not empower a stockholders’ representative, acting solely pursuant to a provision adopted under new § 261(a)(2), to waive, compromise or settle, in the name of any stockholder, any rights to appraisal under § 262 or any direct claim for breach of fiduciary duty that such stockholder is entitled to assert following a merger or consolidation, or to consent, in the name of a stockholder, to restrictive covenants, such as a covenant not to compete or a non-solicitation covenant. The amendments do not, however, restrict any individual stockholder or group of stockholders from granting a stockholders’ representative or other agent any such power or any other delegable power, whether through execution of a joinder to the agreement of merger or consolidation, consent or support agreement or other instrument evidencing assent the grant of such power. Section 5. Section 5 of this Act adds a new § 268(a), which provides that if an agreement of merger (other than a holding company reorganization under § 251(g)) entered into pursuant to subchapter IX provides, with respect to a constituent corporation, that all of the shares of capital stock of the constituent corporation issued and outstanding immediately before the effective time of the merger are converted into or exchanged for cash, property, rights or securities (other than stock of the surviving corporation), then the merger agreement approved by the board need not include any provision relating to the certificate of incorporation of the surviving corporation, the board of directors or any person acting at its direction may approve any amendment or amendment and restatement of the certificate of the surviving corporation, and no alteration or change to the certificate of incorporation of the surviving corporation will be deemed to constitute an amendment to the merger agreement. New § 268(a) is being adopted in light of the Court of Chancery’s decision in in Sjunde AP-Fonden v. Activision Blizzard, Inc., 2024 WL 863290 (Del. Ch. Feb. 29, 2024)(corrected March 19, 2024), which involved a merger transaction in which the board of directors did not approve the certificate of incorporation for the corporation surviving the merger. Among other things, this amendment will provide flexibility to a buyer in a typical “reverse triangular merger” to adopt the terms of the certificate of incorporation of the corporation that, following the effectiveness of the merger, will be wholly owned and controlled by the buyer. Despite the additional statutory flexibility, a target corporation may insist, however, that the merger agreement expressly provide that the certificate of incorporation of the surviving corporation be adopted in a specified form or contain specified provision, such as those relating to indemnification and advancement of expenses of directors, officers and others. Section 5 of this Act also adds a new § 268(b), which provides that a disclosure letter or disclosure schedules or any similar documents or instruments delivered in connection with an agreement of merger or consolidation that modify, supplement, qualify, or make exceptions to representations, warranties, covenants or conditions in the agreement will not, unless otherwise expressly provided by the agreement of merger or consolidation, be deemed part of the agreement for purposes of the provisions of Title 8. New § 268(b) is being adopted to avoid any implication from the Court’s decision in Activision that, in order for an agreement of merger or consolidation to have been duly authorized, the board of directors must have approved final or substantially final disclosure schedules (or similar documents), or that the disclosure schedules (or similar documents) must be submitted to or adopted by the stockholders. The new section reflects the fact that disclosure schedules and similar documents frequently operate as extrinsic facts incorporated by reference into the agreement but are not themselves part of the agreement and, as such, may be negotiated and prepared by officers and agents at the direction of the board of directors without the need, as a statutory matter, for formal approval by the board of directors. New § 268 is not intended to, and does not, alter the fiduciary duties of directors with respect to the delegation of authority to approve the documents addressed by § 268 or the fiduciary duties of officers, as applicable, in exercising any such authority delegated to them or to inform the directors of material provisions, if any, in those documents in connection with a decision by the board of directors to approve an agreement of merger. Section 6. Section 6 of this Act provides that Sections 1 through 5 of this Act shall become effective on August 1, 2024, and shall apply to all contracts made by a corporation, all agreements, instruments or documents approved by the board of directors and all agreements of merger and consolidation entered into by a corporation, in each case whether or not the contracts, agreements, instruments, documents or agreements of merger or consolidation are made, approved or entered into on or before such date, except that Sections 1 through 6 of this Act shall not apply to or affect any civil action or proceeding completed or pending on or before such date. With respect to such suits and proceedings, the law predating the amendments will apply. This Act requires a greater than majority vote for passage because § 1 of Article IX of the Delaware Constitution requires the affirmative vote of two-thirds of the members elected to each house of the General Assembly to amend the general corporation law.AN ACT TO AMEND TITLE 8 OF THE DELAWARE CODE RELATING TO THE GENERAL CORPORATION LAW.
HB 442SignedK. JohnsonThis Act creates the Affordable Housing Production Task Force (“Task Force”). The purpose and mission of the Task Force is to investigate and make findings and rcommendations to the Governor and the General Assembly on how the State and local governments can increase the production of affordable rental units and homes in Delaware. The Task Force shall consist of 20 members some appointed by the Governor, some appointed by the President Pro Tempore of the Senate, some appointed by the Speaker of the House of Representatives, and some will serve as a member by virtue of their official position. The Co-Chairs of the Task Force will be (1) the member of the Delaware Senate appointed by the President Pro Tempore of the Senate, (2) the member of the Delaware House of Representatives appointed by the Speaker of the House of Representatives, and (3) the Director of the Delaware State Housing Authority. The Task Force must create, at a minimum, the following Sub-Committees: (1) Regulating and Permitting, (2) Finance and Development, (3) Construction, (4) Manufactured Housing, (5) Community Focus Groups. The Chairs of the Sub-Committees must be members of the Task Force but the members of the Sub-Committees do not have to be on the Task Force. A Sub-Committee may have a maximum of 9 members. This Act establishes the duties and responsibilities of the Co-Chairs of the Task Force and the requirements that will govern the administration of the Task Force. The first meeting of the Task Force must be held no later than 60 days after enactment of this Act. The Task Force must provide its Final Report by March 1, 2025. This Task Force will expire on the date it submits its Final Report unless its existence is continued by a subsequent act of the General Assembly.AN ACT CREATING AN AFFORDABLE HOUSING PRODUCTION TASK FORCE.

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