The following amendments to the Delaware Constitution and Delaware General Corporation Law became effective August 1, 2007:
Delaware Constitution–Certification of Questions to Delaware Supreme Court
Art. IV, Sec. 11, Para. 8
Article IV, Section 11, Paragraph 8 of the Delaware Constitution of 1897 was amended to allow the U.S. Securities and Exchange Commission to certify questions of Delaware law to the Delaware Supreme Court.
Directors and Officers
Section 141(d) was amended to permit a certificate of incorporation to confer upon one or more directors voting power greater than or lesser than that of any other directors, regardless of whether the director or directors were separately elected by the holders of any class or series of stock.
Section 203(b)(4) was amended to eliminate an exception to Delaware’s Anti-Takeover statute. Section 203 prohibits a corporation from engaging in any business combination with any interested stockholder for a period of three years following the time that the stockholder became an interested stockholder unless certain requirements are met. One exception was if the corporation did not have a class of voting stock that was authorized for quotation on the NASDAQ Stock Market. The Amendment eliminated this exception.
Meetings, Elections, Voting and Notice
Section 216(4) was amended to clarify that, unless otherwise provided in the certificate of incorporation or the bylaws, a plurality vote (and not a majority of the quorum) is the vote required to elect directors where one or more classes or series of stock votes as a separate class or series for the election of directors.
Merger, Consolidation or Conversion
§§ 251 and 255
Sections 251 and 255 were amended to eliminate the requirement that an agreement of merger or consolidation includes a certification by the secretary or assistant secretary of the corporation that the agreement has been adopted by the requisite vote of the stockholders or members, as applicable, or otherwise has been approved in accordance with Section 251 without a vote of the stockholders, if a certificate of merger or consolidation is filed in lieu of filing the agreement. Because of incorporations by reference, the amendments to Sections 251 and 255 also eliminated the certification requirement from Sections 252, 254, 256, 258, 263 and 264.
Section 258(b) was amended to clarify that the agreement of merger or consolidation also must be certified by each of the constituent foreign corporations in accordance with the laws under which each was formed.
Section 262(b) was amended to eliminate an exclusion to appraisal rights. The amendment deleted the phrase “designated as a national market system security on an interdealer quotation system by the National Association for Securities Dealers, Inc.”
Sections 262(e) and (k) were amended to clarify the right of a stockholder to withdraw an appraisal demand and receive the merger consideration at any time within 60 days after the effective date of the merger, even if a petition for appraisal has been filed, as long as that stockholder has not filed such a petition or otherwise joined the proceeding as a named party. Section 262(e) was further amended to enable beneficial holders of shares of stock held in street name to file petitions for appraisal and to request a statement of shares with respect to which demands for appraisals have been received in their own name rather than in the name of the stockholder of record.
Sections 262(h) and (i) were amended to establish a presumption that interest is to be awarded for the period from the effective date of the merger until the date of payment of judgment, compounded quarterly and accruing at the rate of 5% over the Federal Reserve discount rate, giving effect to any variation in that rate during that period. The Court of Chancery may depart from this presumptive approach for good cause in order to avoid an inequitable result. Section 262(h) was further amended to clarify that the Court of Chancery in appraisal proceedings does not determine the fair value of shares on its own initiative and that appraisal proceedings are adversary proceedings to be litigated in accordance with generally applicable rules of the Court of Chancery. [The amendments to Section 262 are effective only with respect to transactions consummated pursuant to agreements entered into after August 1, 2007, (or, in the case of short-form merger pursuant to Section 253 of the DGCL, consummated pursuant to resolutions of the board of directors adopted after August 1, 2007) and appraisal proceedings arising out of such transactions.