Delaware Business Entity Act Amendments 2022

The resolution cannot allow a person or an organization to grant itself rights or options.

Second. 157 is also amended to clarify that the board resolution may be made conditional on facts ascertainable outside the resolution and to remove the requirement that the terms of a right or option be set forth or incorporated by reference in an instrument evidencing rights or options.

6. Inspection of the stock list. Second. 219 is amended to remove the requirement to make a list of shares available for inspection at a meeting of shareholders and to clarify how the 10-day period is calculated for the purposes of determining when the company must the list of shares available for consultation by the shareholders before the date of the meeting .

7. Shareholders’ Meetings. Second. 222 is changed to

  1. specify that notice of a meeting of shareholders may be given in any manner permitted by section 232, and
  2. specify that a shareholders’ meeting held by remote communication may be adjourned to remedy a technical defect in calling or continuing the meeting.

In this case, it is not necessary to notify the shareholders of the reconvened date of the meeting if the electronic network of the meeting displays the information required by Sec. 222(c) on when and how the meeting will resume, or whether information regarding the adjourned meeting is provided in the notice of meeting.

8. Actions by Consent. Second. 228 regarding consent of shareholders and members in lieu of a meeting is amended to provide that if the person is not a shareholder or member of record at the time the consent is executed, the consent will be valid only if the person is a shareholder or member of record as of the date of record for the determination of shareholders or partners entitled to consent to the share.

9. Appraisal Rights. Second. 262, governing the rights of expertise is amended in several respects, including the following:

  1. provide appraisal rights to shareholders in connection with a conversion of the company into a foreign corporation or other entity, unless appraisal rights are denied under the stated “marketing” exception at the Sec. 262(b).
  2. provide that a beneficial owner of shares, on behalf of the person, may require a valuation if (i) the beneficial owner has continuously retained beneficial ownership of the shares from the date of application until the effective date of merger, consolidation or conversion, (ii) satisfies the requirements applicable to shareholders under Sec. 262(a) and (iii) include in the written request the identity of the record holder, documentary evidence of the beneficial ownership of the beneficial owner, and an address at which the beneficial owner consents to receive notice of the survivor, resultant, or convert entity.

    “Beneficial Owner” means a person who is the beneficial owner of shares held either in a voting trust or by an agent on behalf of the person. The word “person” means any individual, corporation, partnership, unincorporated association or other entity.

  3. To eliminate valuation rights as part of a merger, consolidation, or conversion of an entity that has domesticated itself as a Delaware corporation pursuant to Sec. 388, if the merger, consolidation or conversion is permitted pursuant to Sec. 388.
  4. Clarify that valuation rights are denied to holders of classes or series of shares that are listed on a national stock exchange or held by more than 2,000 record holders in connection with mergers, consolidations or conversions adopted with consent of shareholders to the same extent as the valuation rights are denied to such holders if any of these transactions is passed at a meeting of shareholders.
  5. Provide that instead of including in a notice of assessment rights a copy of s. 262 (and a copy of s. 114, if applicable), a company may instead include in the notice information directing reviewers to a publicly available electronic resource to access the art. 262 (and s. 114, if applicable).
  6. To clarify how the expenses of a shareholder or beneficial owner who has participated in a valuation proceeding may be charged pro rata to the value of all shares eligible for a valuation award, and that a dismissal unconditional under art. 262(k) terminates the jurisdiction of the Court of Chancery over a person who has requested an assessment under s. 262.
  7. Clarify that a shareholder or beneficial owner may withdraw a request for a valuation in respect of less than all of the shares for which the person originally requested a valuation.

10. Conversions to a national company. Second. 265 is amended to provide that approval of the conversion of other entities into corporations in the manner provided for in 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 approval of the certificate of incorporation by the same authority required to approve the conversion, must occur before the certificate of conversion becomes effective. (Previously, before the filing of the conversion certificate.)

11. Domestic company conversions. Second. 266 is amended to change the requirement for shareholder approval of the conversion of a corporation into another entity, from all of the outstanding shares of the corporation to a majority of the outstanding shares eligible to vote on a conversion.

If the corporation converts into a partnership with one or more general partners, the conversion also requires the approval of each shareholder who will become a general partner of the partnership. Second. 266 is also amended to provide that the certificate of conversion into a foreign entity must indicate that the company agrees to be served in Delaware in an action to enforce the obligations arising from the conversion, including the rights devaluation.

For any company incorporated before August 1, 2022, any provision contained in its certificate of incorporation or in any voting trust agreement or other written agreement between or among the company and one or more shareholders which restricts, conditions or prohibits the making of an amalgamation or consolidation is also deemed to apply to a conversion, unless the certificate of incorporation or the agreement expressly provides otherwise.

12. Dissolution. Dry. 275 and 276 are amended to provide that if a corporation (s. 275) or a corporation without shares (s. 276) has included in its certificate of incorporation a provision limiting the duration of its existence to a date determined in accordance with s. . 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.

Failure to timely file the certificate of dissolution will not affect its expiration or existence on the date stated 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 stated in the certificate of incorporation shall have no effect.

Second. 275 is also amended to provide that a corporation will be dissolved on the earlier of (1) the date stated in its certificate of incorporation or (2) coming into force pursuant to s. 103 of a certificate of dissolution produced in accordance with this article.

13. Domestic. Second. 388 is amended to permit a non-U.S. entity to adopt a domestication plan setting forth, among other information, the terms and conditions of the domestication and the manner of their enforcement, the manner of exchanging or converting the interests of the non-US entity to be domesticated, and any other details or arrangements deemed desirable. The certificate of incorporation must be submitted as an attachment.

A domestication plan may also set out the corporate actions to be taken by the domesticated company in the domestication, each of which must be approved in accordance with the requirements of all applicable non-U.S. laws before the domestication takes effect. domestication. Once approved, such corporate actions will be deemed authorized, adopted and approved, as the case may be, by the domesticated company and its board of directors, shareholders or members, as the case may be, and will not require any further action by the board of directors. administration, shareholders or members of the domesticated company.

A business domestication certificate must certify that, if a domestication plan is adopted, all provisions of the plan will be approved prior to the certificate becoming effective in accordance with all applicable non-US laws. The article is also amended to state that before the entry into force of the certificate of domestication of the company (formerly, before the filing of the certificate), the domestication must be approved in accordance with the document, instrument, agreement or other writing, depending on the case. , governing the internal affairs of the non-US entity and the conduct of its business or by applicable non-US law.

14. Annual Franchise Tax Report. Second. 502 of the Franchise Tax Act is amended to clarify that the principal place of business address included in the annual franchise tax return cannot be the Delaware corporate office address, unless the company maintains its principal place of business in Delaware and serves as its own registered agent.

15. Large Business Registrant. Second. 503 of the Franchise Tax Act is amended to provide that once a company is designated by the Secretary of State as a large reporting company, it will be treated as a large reporting company until that it submit evidence to the Secretary of State for any year in which it does not meet the criteria to be a large reporting company. The redesignation will be effective from the date proof of redesignation is received by the Secretary of State and will not retroactively change a corporation’s large business reporting status.

16. Effective date. The amendments are effective August 1, 2022, except for the amendment to Sec. 266 is only effective with respect to corporations converted pursuant to resolutions of the board of directors approving the conversion that are passed on or after August 1, 2022, and amendments to s. 262 are effective only with respect to amalgamations, consolidations or conversions adopted or entered into, as the case may be, on or after August 1, 2022.

The amendments to art. 262 and 388 are effective only for domesticated societies with respect to which a domestication plan is entered into on or after August 1, 2022, or, if no domestication plan is entered into in connection with the domestication, any domesticated society at in respect of which the approvals required by section 388(h), as amended by the Bill, are obtained on or after August 1, 2022.