Recent Notable Changes To Delaware Corporate Law
This summer the Delaware legislature passed several amendments to the Delaware General Corporation Law (DGCL) which impact public and private companies incorporated in Delaware, and elsewhere, as many states follow the DGCL.
Mergers Using DGCL Section 251(h)
Section 251(h) was first enacted in 2013. Section 251(h) eliminates the need for shareholder approval to complete a merger, where such merger is completed following a tender or exchange offer and the acquirer owns at least the percentage amount of the target that is needed to approve the merger. That is, Section 251(h) eliminates unnecessary time and expense related to a vote on a merger when certain preconditions have been satisfied. These preconditions include:
- The merger must be consummated as soon as practicable following the tender offer or exchange offer;
- The underlying tender or exchange offer must be for all of the outstanding stock of the target, except for the stock owned by the acquirer or any person that directly or
Delaware General Corporate Law; 2014 Amendments Summarized
ABA Journal’s 10th Annual Blawg 100
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Although the federal government and FINRA have become increasingly active in matters of corporate governance, the states still remain the primary authority and regulator of corporate law. State corporation law is generally based on the Delaware Model Act and offers corporations a degree of flexibility from a menu of reasonable alternatives that can be tailored to companies’ business sectors, markets and corporate culture. Moreover, state judiciaries review and rule upon corporate governance matters, considering the facts and circumstances of each case and setting factual precedence based on such individual circumstances. In 2014 there were several changes to the Delaware General Corporation Law (DGCL) which impact public and private companies incorporated in Delaware, and elsewhere, since most states follow the DGCL.
The 2014 amendments which became effective on August 1, 2014, address: (1) mergers under DGCL Section 251(h) permitting a merger without a stockholder vote following certain tender or exchange offers; (2) director and
