Delaware General Assembly

Signed 6/23/00

The General Assembly has ended, the current status is the final status.

5/18/00

Sharp

AN ACT TO AMEND TITLE 8 OF THE DELAWARE CODE RELATING TO THE GENERAL CORPORATION LAW.

Section 1. The amendment to Section 102(a)(1) adds the names of limited liability companies and business trusts to the names of business entities that may not, without consent, conflict with the name of a Delaware corporation. Section 2. The amendment to Section 103(a)(1) clarifies that an instrument (other than the certificate of incorporation) to be filed before the election of the initial board of directors (if the initial directors were not named in the certificate of incorporation) may be signed by the incorporator's or incorporators' successors and assigns, and also provides that if any incorporator is not available by reason of death, unknown address, or refusal or neglect to act, any such instrument may be signed by any person for whom or on whose behalf such incorporator in executing the certificate of incorporation was acting as employee or agent, with the same effect as if such incorporator had signed it. Section 3. New subsection 122(17) clarifies that a corporation has the power to renounce in advance, in its certificate of incorporation or by action of its board of directors (including action approving an agreement to which the corporation is a party), the corporation's interest or expectancy in specified business opportunities or specified classes or categories of business opportunities. By way of example, the classes or categories of business opportunities may be specified by any manner of defining or delineating business opportunities or the corporation's or any other party's entitlement thereto or interest therein, including, without limitation, by line or type of business, identity of the originator of the business opportunity, identity of the party or parties to or having an interest in the business opportunity, identity of the recipient of the business opportunity, periods of time or geographical location. The subsection is intended to eliminate uncertainty regarding the power of a corporation to renounce corporate opportunities in advance raised in Siegman v. Tri-Star Pictures, Inc., C. A. No. 9477 (Del. Ch. May 5, 1989, revised May 30, 1989). It permits the corporation to determine in advance whether a specified business opportunity or class or category of business opportunities is a corporate opportunity of the corporation rather than to address such opportunities as they arise. The subsection does not change the level of judicial scrutiny that will apply to the renunciation of an interest or expectancy of the corporation in a business opportunity, which will be determined based on the common law of fiduciary duty, including the duty of loyalty. Sections 4, 5 and 6. The amendments to subsections (b), (f) and (i) of Section 141(b) permit a corporation's directors to make use of available communication technologies. As amended, subsections 141(b) and (f) permit director resignations and actions by consent to be submitted or taken by electronic transmission, as defined in new Section 232(c). Section 7. The amendment to Subsection (a) expands the use companies may make of new technologies in the conduct of stockholder meetings. Paragraph (1) allows stockholder meetings to be held entirely by remote communication, without a venue for physical attendance, if so determined by the board of directors in its sole discretion. In addition, paragraph (a)(1) eliminates the former default provision that provided, absent a bylaw identifying the location, that stockholder meetings be held at the corporation's registered office in Delaware. Paragraph (2) of subsection (a) authorizes stockholder participation by remote communication, as well as presence and voting by remote communication, if so determined by the board of directors in its sole discretion. Such presence and voting is permitted only if the corporation implements (i) verification procedures, (ii) measures to ensure such stockholders have an opportunity to participate in the meeting and vote, and (iii) means to record the votes of such stockholders. Section 8. The amendment to Subsection (e) defines written ballot to include ballots submitted by electronic transmission, as defined by Section 232. Sections 9 and 10. The amendments to Section 219 delete from the existing statute provisions requiring that the list of stockholders be available either at a place within the city where the meeting is to be held or at the place of the meeting for 10 days prior to the meeting, and substitute in lieu thereof a requirement that the list either be made available on an electronic network or at the corporation's principal place of business. The amendments also provide that, in the case of a meeting of stockholders held without a physical location, the list shall be made available during the meeting on an electronic network. Sections 11, 12 and 13. The amendment to subsection (b) of Section 222 conforms to the corresponding provision in new Section 232. The amendments to subsections (a) and (c) conform the statutory notice requirements to the changes to Section 211, which permit stockholder meetings to be held by means of remote communication, if so determined by the board of directors in its sole discretion. Section 14. The Amendments to Section 224 are intended to modernize and simplify the technical terminology describing non-paper forms of record storage that may be utilized by corporations. The amendments also relax existing requirements that the corporation must convert such records to clearly legible written form upon the request of any person entitled to inspection. As amended, the statute requires conversion only in respect to inspection rights arising under this chapter. The amendments are not intended to effect any changes of substance with respect to conversion requirements or inspection rights arising from other sources, including other statutes, regulations, and rules of procedure. Section 15. The amendments to Section 228 generally permit the use of electronically transmitted consents, and align Section 228 with Section 212(c), governing electronic proxies. The proposed amendments also address the circumstances in which an electronically transmitted consent is deemed to be in writing, dated, and signed by the stockholder, as well as delivery of such a consent. Section 16. The amendment to Section 229 provides that a waiver of notice may be given by electronic transmission (as defined in Section 232 of Title 8), and that neither the business to be transacted at, nor the purpose of, a meeting need be specified in a waiver by electronic transmission, unless the certificate of incorporation or bylaws so require. Section 17. New subsection (c) of Section 230 provides that the exception to requirements of notice under subsection 230(b)(1) does not apply to a notice that has been given by electronic transmission. Section 18. The amendment to subsection (d) of Section 231 of Title 8 expands the types of material that inspectors of election may rely on to include any verification information required of stockholders voting electronically, whether by electronic transmission in lieu of a written ballot or otherwise. Section 19. Section 232 is new. Subsection (a) provides that any notice by the corporation to a stockholder by a form of electronic transmission is effective if the stockholder has consented to the corporation giving notice by that particular form of electronic transmission. It also provides that a stockholder may revoke such consent by written notice to the corporation. Subsection (a) is not intended to suggest that a notice given by a form of electronic transmission and actually received is ineffective solely because the recipient has not consented to the giving of notice by such form of electronic transmission. Subsection (a) further provides that a stockholder's consent to notice by electronic transmission is revoked if the corporation is unable to deliver two consecutive electronic transmission notices, and such inability becomes known to the secretary, assistant secretary, the transfer agent, or other person responsible for giving notice. Subsection (a) also makes clear, however, that the inadvertent failure to treat such inability as a revocation of consent shall not invalidate any meeting or other action. Subsection (b) of Section 232 specifies when notice by a form of electronic transmission is deemed to have been given. Subsection (c) provides a definition of the term "electronic transmission." Subsection (e) specifies that Section 232 does not apply to certain enumerated Sections of the DGCL. Section 20. Section 20 provides for an effective date of July 1, 2000.

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Takes effect upon being signed into law

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