The resolution may not permit a person or body to issue to themselves any rights or options.
Sec. 157 is also amended to clarify that the board resolution may be made dependent on facts ascertainable outside the resolution and to eliminate the requirement that the terms of a right or option be set forth or incorporated by reference in an instrument evidencing the rights or options.
6. Inspection of Stocklist. Sec. 219 is amended to eliminate the requirement to make a stocklist available for inspection during a meeting of stockholders and to clarify how the 10-day period is calculated for purposes of determining when the corporation must make the stocklist available for inspection by stockholders before the meeting date.
7. Stockholder Meetings. Sec. 222 is amended to
- clarify that a notice of a meeting of stockholders may be given in any manner permitted by Section 232, and
- clarify that a meeting of stockholders held by means of remote communication may be adjourned to address a technical failure to convene or continue the meeting.
In that event, notice of when the meeting will reconvene need not be given to stockholders if the electronic network for the meeting displays the information required by Sec. 222(c) about when and how the meeting will reconvene, or if the information regarding the adjourned meeting is provided for in the notice of meeting.
8. Actions by Consent. Sec. 228 regarding consent of stockholders and members in lieu of a meeting is amended to provide that if the person is not a stockholder or member of record when the consent is executed, the consent will not be valid unless the person is a stockholder or member of record as of the record date for determining stockholders or members entitled to consent to the action.
9. Appraisal Rights. Sec. 262, governing appraisal rights is amended in several respects, including the following:
- to provide appraisal rights to stockholders in connection with a conversion of the corporation to a foreign corporation or to any other entity, unless appraisal rights are denied pursuant to the “market out” exception set forth in Sec. 262(b).
- to provide that a beneficial owner of stock, in the person’s name, may demand appraisal if (i) the beneficial owner has continuously maintained a beneficial ownership of the shares from the date of demand through the effective date of the merger, consolidation, or conversion, (ii) meets the requirements applicable to stockholders under Sec. 262(a), and (iii) includes in the written demand the identity of the record holder, documentary evidence of the beneficial owner’s beneficial ownership, and an address at which the beneficial owner consents to receive notice from the surviving, resulting, or converted entity.
“Beneficial owner” means a person who is the beneficial owner of shares of stock held either in a voting trust or by a nominee on behalf of the person. The word “person” means any individual, corporation, partnership, unincorporated association, or other entity.
- To eliminate appraisal rights in connection with a merger, consolidation, or conversion of an entity that has domesticated as a Delaware corporation pursuant to Sec. 388, if the merger, consolidation, or conversion is authorized in accordance with Sec. 388.
- To clarify that appraisal rights are denied for holders of classes or series of stock that are listed on a national securities exchange or held by more than 2,000 record holders in connection with mergers, consolidations, or conversions adopted by stockholder consent to the same extent that appraisal rights are denied to those holders if one of those transactions is adopted at a stockholder meeting.
- To provide that, in lieu of including in a notice of appraisal rights a copy of Sec. 262 (and a copy of Sec. 114, if applicable) a corporation may instead include in the notice information directing the persons entitled to appraisal to a publicly available electronic resource to access Sec. 262 (and Sec. 114, if applicable).
- To clarify how the expenses of a stockholder or beneficial owner who participated in an appraisal proceeding may be charged pro rata against the value of all the shares entitled to an appraisal award, and that an unconditioned dismissal under Sec. 262(k) ends the Court of Chancery’s jurisdiction over a person that has demanded appraisal under Sec. 262.
- To clarify that a stockholder or beneficial owner may withdraw a demand for appraisal with respect to less than all of the shares for which the person initially demanded appraisal.
10. Conversions to a Domestic Corporation. Sec. 265 is amended to provide that the approval of a conversion of other entities to a corporation in the manner provided for by the document, instrument, agreement, or other writing governing the internal affairs of the converting entity and the conduct of its business or by applicable law, and the approval of the certificate of incorporation by the same authorization required to approve the conversion, are required to occur before the certificate of conversion to corporation becomes effective. (Formerly, before filing the certificate of conversion.)
11. Conversions of Domestic Corporations. Sec. 266 is amended to change the requirement for stockholder approval of the conversion of a corporation to another entity, from all of the outstanding shares of stock of the corporation to a majority of the outstanding shares of stock entitled to vote on a conversion.
If the corporation is converting to a partnership with one or more general partners, the conversion also requires the approval of each stockholder who will become a general partner of the partnership. Sec. 266 is also amended to provide that the certificate of conversion to a foreign entity must state that the corporation agrees to be served with process in Delaware in an action to enforce obligations arising from the conversion, including appraisal rights.
For any corporation incorporated before August 1, 2022, any provision contained in its certificate of incorporation or in a voting trust agreement or other written agreement between or among the corporation and one or more stockholders that restricts, conditions or prohibits consummation of a merger or consolidation is also deemed to apply to a conversion, unless the certificate of incorporation or the agreement expressly provides otherwise.
12. Dissolution. Secs. 275 are 276 are amended to provide that if a corporation (Sec. 275) or nonstock corporation (Sec. 276) has included in its certificate of incorporation a provision limiting the duration of its existence to a specified date in accordance with Sec. 102(b)(5), a certificate of dissolution must be executed, acknowledged and filed within 90 days before the specified date and will become effective on the specified date.
The failure to timely file the certificate of dissolution will not affect the expiration or its existence on the date specified in its certificate of incorporation pursuant to Sec. 102(b)(5) and will not eliminate the requirement to file a certificate of dissolution. A certificate of good standing issued by the Secretary of State after the date specified in the certificate of incorporation will be of no force.
Sec. 275 is also amended to provide that a corporation will be dissolved upon the earlier of (1) the date specified in its certificate of incorporation or (2) the effectiveness in accordance with Sec. 103 of a certificate of dissolution filed in accordance with this section.
13. Domestication. Sec. 388 is amended to permit a non-United States entity to adopt a plan of domestication setting forth, among other information, the terms and conditions of the domestication and the mode of carrying them into effect, the manner of exchanging or converting the equity interests of the non-United States entity to be domesticated, and any other details or provisions deemed desirable. The certificate of incorporation must be set forth as an attachment.
A plan of domestication may also set forth corporate actions to be taken by the domesticated corporation in connection with the domestication, each of which must be approved in accordance with the requirements of all applicable non-United States law before the effectiveness of the domestication. Once approved, those corporate actions will be deemed authorized, adopted, and approved, as applicable, by the domesticated corporation and its board of directors, stockholders, or members, as applicable, and will not require any further action of the board of directors, stockholders or members of the domesticated corporation.
A certificate of corporate domestication must certify that, if a plan of domestication is adopted, all provisions of the plan will be approved before the effectiveness of the certificate in accordance with all applicable non-United States law. The section is also amended to state that before the certificate of corporate domestication becomes effective, (formerly, before filing the certificate), the domestication must be approved in accordance with the document, instrument, agreement, or other writing, as the case may be, governing the internal affairs of the non-United States entity and the conduct of its business or by applicable non-United States law.
14. Annual Franchise Tax Report. Sec. 502 of the Franchise Tax Law is amended to clarify that the principal place of business address included in the annual franchise tax report cannot be the address of the registered office in Delaware unless the corporation maintains its principal place of business in Delaware and serves as its own registered agent.
15. Large Corporate Filer. Sec. 503 of the Franchise Tax Law is amended to provide that once a corporation is designated by the Secretary of State as a large corporate filer, it will be considered a large corporate filer until it submits evidence to the Secretary of State for any year in which it does not meet the criteria to be a large corporate filer. The re-designation will be effective as of the date the evidence of re-designation is received by the Secretary of State and will not retroactively modify the large corporate filer status of any corporation.
16. Effective Date. The amendments are effective August 1, 2022, except the amendment to Sec. 266 is effective only with respect to corporations converting pursuant to resolutions of the board of directors approving the conversion that are adopted on or after August 1, 2022, and the amendments to Sec. 262 are effective only with respect to mergers, consolidations, or conversions adopted or entered into, as applicable, on or after August 1, 2022.
The amendments to Sec. 262 and 388 are effective only for domesticated corporations with respect to which a plan of domestication is entered into on or after August 1, 2022, or, if no plan of domestication is entered into in connection with the domestication, any domesticated corporations with respect to which the approvals required by Section 388(h), as amended by the bill, are obtained on or after August 1, 2022.
