CHAPTER 437
FORMERLY
HOUSE BILL NO. 801
AS AMENDED BY HOUSE AMENDMENT NO. 1
AN ACT TO AMEND CHAPTER 1, TITLE 8, DELAWARE CODE, RELATING TO THE GENERAL CORPORATION LAW.
Be it enacted by the General Assembly of the State of Delaware (two-thirds of all members elected to each House thereof concurring therein):
Section 1. Amend Section 109 of Title 8, Delaware Code, by striking the present subsection (a) thereof and inserting in lieu thereof a new subsection (a) to read as follows:
"(a) The original or other by-laws of a corporation may be adopted, amended, or repealed by the incorporators, by the initial directors if they were named in the certificate of incorporation, or, before a corporation has received any payment for any of its stock, by its board of directors. After a corporation has received any payment for any of its stock, the power to adopt, amend or repeal by-laws shall be in the stockholders entitled to vote, or in the case of a nonstock corporation, in its members entitled to vote; provided, however, any corporation may, in its certificate of incorporation, confer the power to adopt, amend, or repeal bylaws upon the directors or, in the case of a non-stock corporation, upon its governing body by whatever name designated. The fact that such power has been so conferred upon the directors or governing body, as the case may be, shall not divest the stockholders or members of the power, nor limit their power to adopt, amend or repeal by-laws."
Section 2. Amend Section 141 of Title 8, Delaware Code, by striking the first sentence of subsection (a) thereof in its entirety and inserting in lieu thereof a new first sentence to read as follows:
"(a) The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors, except as may be otherwise provided in this chapter or in its certificate of incorporation."
Section 3. Amend Section 141 of Title 8, Delaware Code, by inserting in subsection (b) thereof a new sentence immediately following the third sentence thereof to read as follows:
"The certificate of incorporation or by-laws may prescribe other qualifications for directors."
Section 4. Amend Section 141 of Title 8, Delaware Code, by inserting in subsection (d) thereof two new sentences following the last sentence of the present section to read as follows:
"The certificate of incorporation may confer upon holders of any class or series of stock the right to elect one or more directors who shall serve for such term, and have such voting powers as shall be stated in the certificate of incorporation. The terms of office and voting powers of the directors elected in the manner so provided in the certificate of incorporation may be greater than or less than those of any other director or class of directors."
Section 5. Amend Section 141, Title 8, Delaware Code, by adding a new subsection (k) to read as follows:
"(k) Any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except as follows :
(i) Unless the certificate of incorporation otherwise provides, in the case of a corporation whose board is classified. as provided in subsection (d) of this section, shareholders may effect such removal only for cause; or
(ii) In case of a corporation having cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire board of directors, or, if there be classes of directors, at an election of the class of directors of which he is a part.
Whenever the holders of any class or series are entitled to elect one or more directors by the provisions of the certificate of incorporation, the provisions of this subsection shall apply, in respect to the removal without cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole."
Section 6. Amend Section 142, Title 8, Delaware Code, by deleting subsection (a) thereof in its entirety and inserting in lieu thereof a new subsection (a) to read as follows:
"(a) Every corporation organized under this chapter shall have such officers with such titles and duties as shall be stated in the by-laws or in a resolution of the board of directors which is not inconsistent with the by-laws and as may be necessary to enable it to sign instruments and stock certificates which comply with sections 103 (a) (2) and 158 of this chapter. One of the officers shall have the duty to record the proceedings of the meetings of the stockholders and directors in a book to be kept for that purpose. Any number of offices may be held by the same person unless the certificate of incorporation or by-laws otherwise provide."
Section 7. Amend Section 145, Title 8, Delaware Code, by deleting subsection (h) thereof in its entirety and by inserting in lieu thereof a new subsection (h) to read as follows:
"(h) For purposes of this Section, references to 'the corporation' shall include, in addition to the resulting corporation, any constitutuent corporation (including any constitutuent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any persons who is or was a director, officer, employee or agent of such constitutent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued."
Section 8. Amend Section 152, Title 8, Delaware Code, by striking said section in its entirety and by inserting in lieu thereof a new Section 152 to read as follows:
§152. Issuance of stock, lawful consideration; fully paid stock
The consideration, as determined pursuant to subsections (a) and (b) of Section 153 of this title, for subscriptions to, or the purchase of, the capital stock to be issued by a corporation shall be paid in such form and in manner as the board of directors shall determine. In the absence of actual fraud in the transaction, the judgment of the directors as to the value of such consideration shall be conclusive. The capital stock so issued shall be deemed to be fully paid and nonassessable stock, if : (1) the entire amount of such consideration has been received by the corporation in the form of cash, services rendered, personal property, real property, leases of real property, or a combination thereof; or (2) not less than the amount of the consideration determined to be capital pursuant to Section 154 of this title has been received by the corporation in such form and the corporation has received a binding obligation of the subscriber or purchaser to pay the balance of the subscription or purchase price; provided, however, nothing contained herein shall prevent the board of directors from issuing partly paid shares under Section 156 of this title."
Section 9. Amend Section 160, Title 8, Delaware Code, by adding the following sentence to paragraph (1) of subsection (a) thereof:
"Nothing in this subsection shall invalidate or otherwise affect a note, debenture or other obligation of a corporation given by it as consideration for its acquisition by purchase, redemption or exchange of its shares of stock if at the time such note, debenture or obligation was delivered by the corporation its capital was not then impaired or did not thereby become impaired."
Section 10. Amend Section 173, Title 8, Delaware Code, by striking said section in its entirety and inserting a new section to read as follows:
1173. Declaration and payment of dividends
"No corporation shall pay dividends except in accordance with the provisions of this chapter. Dividends may be paid in cash, in property, or in shares of the corporation's capital stock. If the dividend is to be paid in shares of the corporation's theretofore unissued capital stock the board of directors shall, by resolution, direct that there be transferred from surplus to the capital account in respect of such shares an amount which is not less than the aggregate par value of par value shares being declared as a dividend and, in the case of shares without par value being declared as a dividend, such amount as shall be determined by the board of directors. No transfer from surplus to capital shall be necessary if shares are being distributed by a corporation pursuant to a split-up or division of its stock rather than as payment of a dividend declared payable in stock of the corporation."
Section 11. Amend Section 245, Title 8, Delaware Code, by striking subsection (d) thereof and inserting a new subsection (d) in lieu thereof to read as follows:
"(d) A restated certificate of incorporation shall be executed, acknowledged, filed and recorded in accordance with Section 103 of this title. Upon its filing with the Secretary of State, the original certificate of incorporation, as theretofore amended or supplemented, shall be superseded; thenceforth, the restated certificate of incorporation, including any further amendments or changes made thereby, shall be the certificate of incorporation of the corporation, but the original date of incorporation shall remain unchanged."
Section 12. Amend Section 251, Title 8, Delaware Code, by inserting in subsection (b) thereof a new sentence at the end of said subsection, to read as follows:
"Any of the terms of the agreement of merger or consolidation may be made dependent upon facts ascertainable outside of such agreement, provided that the manner in which such facts shall operate upon the terms of the agreement is clearly and expressly set forth in the agreement of merger or consolidation."
Section 13. Amend Section 251, Title 8, Delaware Code, by inserting in subsection (c) thereof a new sentence at the end of said subsection to read as follows:
"In lieu of filing and recording the agreement or merger or consolidation, the surviving or resulting corporation may file a certificate of merger or consolidation, executed in accordance with section 103 of this title, which states (1) the name and state of incorporation of each of the constituent corporations, (2) that an agreement of merger or consolidation has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with this subsection, (3) the name of the surviving or resulting corporation, (4) the amendments or changes, if any, in the certificate of incorporation of the surviving corporation that are to be effected by merger or consolidation, or, if none, that the certificate of incorporation of one of the constituent corporations, naming it, shall be the certificate of incorporation of the surviving or resulting corporation, (5) that the executed agreement of consolidation or merger is on file at the principal place of business of the surviving corporation, stating the address thereof and (6) that a copy of the agreement of consolidation or merger will be furnished by the surviving corporation, on request and without cost, to any stockholder of any constituent corporation."
Section 14. Amend Section 251, Title 8, Delaware Code, by inserting in subsection (f) thereof a new sentence at the end of the first sentence thereof to read as follows:
"No vote of stockholders of a constituent corporation shall be necessary to authorize a merger or consolidation if no shares of the stock of such corporation shall have been issued prior to the adoption by the board of directors of the resolution approving the agreement of merger of consolidation."
Section 15. Amend Section 252, Title 8, Delaware Code, by inserting in subsection (b) thereof a new sentence at the end of said subsection, to read as follows:
"Any of the terms of the agreement of merger or consolidation may be made dependent upon facts ascertainable outside of such agreement, provided that the manner in which such facts shall operate upon the terms of the agreement is clearly and expressly set forth in the agreement of merger or consolidation."
Section 16. Amend Section 252, Title 8, Delaware Code, by inserting in subsection (c) thereof a new sentence at the end of said subsection, to read as follows:
"In lieu of filing and recording the agreement of merger or consolidation, the surviving or resulting corporation may file a certificate of merger or consolidation, executed in accordance with section 103 of this title, which states (1) the name and state of incorporation of each of the constituent corporations, (2) that an agreement of merger or consolidation has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with this subsection, (3) the name of surviving or resulting corporation, (4) if the surviving corporation is a corporation of this State, the amendments or changes, if any, in the certificate of incorporation of the surviving corporation that are to be effected by the merger or consolidation, or, if none, that the certificate of incorporation of one of the constituent Delaware corporations, naming it, shall be the certificate of corporation of the surviving or resulting corporation, (5) if the surviving corporation is not a corporation of this State, the certificate of incorporation of the surviving corporation, with such amendments as are effected by the merger or consolidation, shall be set forth in full, (6) that the executed agreement of consolidation or merger is on file at the principal place of business of the surviving corporation and the address thereof, (7) that a copy of the agreement of consolidation or merger will be furnished the surviving corporation, on request and without cost, to any stockholder of any constituent corporation, (8) if the corporation surviving or resulting from the merger or consolidation is to be a corporation of this State, the authorized capital stock of each constituent corporation which is not a corporation of this State, and (9) the agreement, if any, required by subsection (d) of this section."
Section 17. Amend Section 254, Title 8, Delaware Code, by inserting in subsection (c) thereof a new sentence at the end of said subsection, to read as follows:
"Any of the terms of the agreement of merger or consolidation may be made dependent upon facts ascertainable outside of such agreement, provided that the manner in which such facts shall operate upon the terms of the agreement is clearly and expressly set forth in the agreement of merger or consolidation."
Section 18. Amend §254, Title 8, Delaware Code, by inserting subsection (d) thereof a new sentence at the end of said subsection to read as follows:
"In lieu of filing and recording the agreement of merger or consolidation, the surviving or resulting corporation may file a certificate of merger or consolidation, executed in accordance with section 103 of this title, which states (1) the name and state of domicile of each of the constituent entities, (2) that an agreement of merger or consolidation has been approved, adopted, certified, executed and acknowledged by each of the constituent entities in accordance with this subsection, (3) the name of the surviving or resulting corporation, (4) the amendments or changes, if any, in the certificate of incorporation of the surviving corporation that are to be effected by the merger or consolidation, or, if none, that the certificate of incorporation of one of the constituent corporations, naming it, shall be the certificate of incorporation of the surviving or resulting corporation, (5) that the executed agreement of consolidation or merger is on file at the principal place of business of the surviving corporation and the address thereof, and (6) that a copy of the agreement of consolidation or merger will be furnished by the surviving corporation, on request and without cost, to any stockholder of any constituent entity."
Section 19. Amend §255, Title 8, Delaware Code, by inserting in subsection (b) thereof a new sentence at the end of said subsection, to read as follows: "Any of the terms of the agreement of merger or consolidation may be made dependent upon facts ascertainable outside of such agreement, provided that the manner in which such facts shall operate upon the terms of the agreement is clearly and expressly set forth in the agreement of merger or consolidation."
Section 20. Amend Section 255, Title 8, Delaware Code, by inserting in subsection (c) thereof a new sentence at the end of said subsection, to read as follows:
"The provisions set forth in the last sentence of Section 251 (c) shall apply to a merger under this Section, and the reference therein to 'stockholder' shall be deemed to include 'member' hereunder."
Section 21. Amend §256, Title 8, Delaware Code, by inserting in subsection (b) thereof a new sentence at the end of said subsection, to read as follows:
"Any of the terms of the agreement of merger or consolidation may be made dependent upon facts ascertainable outside of such agreement, provided that the manner in which such facts shall operate upon the terms of the agreement is clearly and expressly set forth in the agreement of merger or consolidation."
Section 22. Amend Section 256, Title 8, Delaware Code, by inserting in subsection (c) thereof a new sentence at the end of said subsection, to read as follows:
"Insofar as they may be applicable, the provisions set forth in the last sentence of Section 252 (c) shall apply to a merger under this Section, and reference therein to 'stockholder' shall be deemed to include 'member' hereunder."
1Section 23. Amend §257, Title 8, Delaware Code, by inserting in subsection (b) thereof a new sentence at the end of said subsection to read as follows:
"Any of the terms of the agreement of merger or consolidation may be made dependent upon facts ascertainable outside of such agreement, provided that the manner in which such facts shall operate upon the terms of the agreement is clearly and expressly set forth in the agreement of merger or consolidation."
Section 24. Amend Section 257, Title 8, Delaware Code, by inserting in subsection (c) thereof a new sentence at the end of said subsection, to read as follows:
"Insofar as they may be applicable, the provisions set forth in the last sentence of Section 251 (c) shall apply to a merger under this Section, and the reference therein to 'stockholder' shall be deemed to include 'member' hereunder."
Section 25. This act shall take effect on July 1, 1974.
Section 26. All rights, privileges and annuities vested or accrued by and under any laws enacted prior to the adoption or amendment of this act, all suits pending, or rights of actions convened, and/or duties, restrictions, liabilities and penalties imposed or required by and under laws enacted prior to the adoption or amendment of this act, shall not be impaired, diminished or affected by this act.
Approved July 11, 1974