CHAPTER 421

AN ACT TO AMEND TITLE 8 OF THE DELAWARE CODE RELATING TO CORPORATIONS BY MAKING CERTAIN CHANGES IN SECTIONS 141, 145, 151, 214, 221, 243, 251, 254, 371, 372, 391, 502, 504, 506 and 618.

Be it enacted by the General Assembly of the State of Delaware (two-thirds of all the members elected to each branch thereof concurring therein):

Section 1. Section 141, Title 8, Delaware Code, is amended by deleting the phrases, "or governing body", "governing body", "or the governing body", "or body", and "body" in each instance in which they appear in subsections (e), (f), (g), and (I) thereof and by adding a new subsection (j) to read as follows:

(j) The certificate of incorporation of any corporation organized under this chapter which is not authorized to issue capital stock may provide that less than one-third of the members of the governing body may constitute a quorum thereof and may otherwise provide that the business and affairs of the corporation shall be managed in a manner different from that provided in this section. Except as may be otherwise provided by the certificate of incorporation, the provisions of this section shall apply to such a corporation, and when so applied, all references to the board of directors, to members thereof, and to stockholders shall be deemed to refer to the governing body of the corporation, the members thereof and the members of the corporation, respectively.

Section 2. Section 145, Title 8, Delaware Code, is amended by adding a new subsection (h) to read as follows:

(h) For the purposes of this section, references to "the corporation" include all constituent corporations absorbed in a consolidation or merger as well as the resulting or surviving corporation so that any person who is or was a director, officer, employee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this section with respect to the resulting or surviving corporation as he would if he had served the resulting or surviving corporation in the same capacity.

Section 3. Section 151, Title 8, Delaware Code, is amended by deleting subsection (b) and by substituting in lieu thereof the following:

(b) Any preferred or special stock may be made redeemable for cash, property or rights, including securities of any other corporation, at the option of either the holder or the corporation or upon the happening of a specified event, at such time or times, such price or prices, or such rate or rates, and with such adjustments, as shall be stated in the certificate of incorporation or in the resolution or resolutions providing for the issue of such stock adopted by the board of directors as hereinabove provided.

Section 4. Section 151, Title 8, Delaware Code, is amended by deleting subsection (g) and by substituting in lieu thereof the following:

(g) When any corporation desires to issue any shares of stock of any class or of any series of any class of which the voting powers, designations, preferences and relative, participating, optional or other rights, if any, or the qualifications, limitations or restrictions thereof, if any, shall not have been set forth in the certificate of incorporation or in any amendment thereto but shall be provided for in a resolution or resolutions adopted by the board of directors pursuant to authority expressly vested in it by the provisions of the certificate of incorporation or any amendment thereto, a certificate setting forth a copy of such resolution or resolutions and the number of shares of stock of such class or series shall be executed, acknowledged, filed, recorded, and shall become effective, in accordance with Section 103 of this title. Unless otherwise provided in any such resolution or resolutions, the number of shares of stock of any such class or series so set forth in such resolution or resolutions may be increased or decreased (but not below the number of shares thereof then outstanding) by a certificate likewise executed, acknowledged, filed and recorded setting forth a statement that a specified increase or decrease therein had been authorized and directed by a resolution or resolutions likewise adopted by the board of directors. In case the number of such shares shall be decreased, the number of shares so specified in the certificate shall resume the status which they had prior to the adoption of the first resolution or resolutions.

Section 5. Section 214, Title 8, Delaware Code, is amended by deleting said section and substituting in lieu thereof the following:

§ 214. Cumulative voting

The certificate of incorporation of any corporation may provide that at all elections of directors of the corporation, or at elections held under specified circumstances, each holder of stock or of any class or classes or of a series or series thereof shall be entitled to as many votes as shall equal the number of votes which (except for such provision as to cumulative voting) he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected by him, and that he may cast all of such votes for a single director or may distribute them among the number to be voted for, or for any two or more of them as he may see fit.

Section 6. Section 221, Title 8, Delaware Code, is amended by deleting said section and by substituting in lieu thereof the following:

§ 221. Voting, inspection and other rights of bondholders and debenture holders

Every corporation may in its certificate of incorporation confer upon the holders of any bonds, debentures, or other obligations issued or to be issued by the corporation the power to vote in respect to the corporate affairs and management of the corporation to the extent and in the manner provided in the certificate of incorporation, and may confer upon such holders of bonds, debentures or other obligations the same right of inspection of its books, accounts and other records, and also any other rights, which the stockholders of the corporation have or may have by reason of the provisions of this chapter or of its certificate of incorporation. If the certificate of incorporation so provides, such holders of bonds, debentures or other obligations shall be deemed to be stockholders, and their bonds, debentures or other obligations shall be deemed to be shares of stock, for the purpose of any provision of this chapter which requires the vote of stockholders as a prerequisite to any corporate action and the certificate of incorporation may divest the holders of capital stock, in whole or in part, of their right to vote on any corporate matter whatsoever, except as set forth in section 242 (c) (2) of this chapter.

Section 7. Section 243, Title 8, Delaware Code, is amended by deleting the title and subsections (a), (b), (c), (d), (e) and (f) and by substituting in lieu thereof the following:

§ 243. Redemption, purchase, retirement, conversion or exchange of stock

(a) Whenever any corporation has issued any preferred or special shares it may, subject to the provisions of the certificate of incorporation —

(1) Redeem all or any part of such shares, if redeemable, in the manner provided in the certificate of incorporation, or

(2) Purchase all or any part of such shares, but in the case of shares subject to redemption, at not exceeding the price or prices at which such shares may be redeemed at the time of purchase, or

(3) By resolution of the board of directors, retire any such shares redeemed or purchased out of surplus as defined in section 154 of this title, or

(4) Convert or exchange any such shares into or for other shares of the corporation in the manner provided in the certificate of incorporation.

(b) The corporation may apply to such redemption, purchase or retirement, under subparagraphs 1, 2 or 3 of subsection (a) of this section, an amount of its capital which shall not be greater than the sum of —

(1) That part of the consideration received for such shares which shall be capital pursuant to the provisions of section 154 of this title and that part of surplus which shall have been transferred and treated as capital in respect of such shares pursuant to the provisions of that section, and

(2) Any amounts by which the capital of the corporation all have been increased by other transfers from surplus in accordance with the provisions of that section, except those transfers, if any, which shall have been made in respect of other preferred or special shares.

No such redemption, purchase, or retirement, however, shall be made out of capital except as provided in this section, and there shall be no such reductions a capital unless the assets of the corporation remaining after such redemption or purchase shall be sufficient to pay any debts of the corporation, the payment of which shall not have been otherwise provided for.

(c) Whenever, upon the conversion or exchange of shares of any class into or for other shares of the corporation, the amount of capital represented by such shares exceeds the total aggregate par or stated value represented by such other shares, the corporation by resolution of the board of directors may reduce its capital at any time thereafter by all or any part of such excess.

(d) Any such shares so redeemed, purchased or retired by the application of capital pursuant to the provisions of this section, shall, upon the filing of the certificate required by this section, and any such shares of the corporation surrendered to it on the conversion or exchange thereof into or for other shares of the corporation shall, after such conversion or exchange, have the status of authorized and unissued shares of the class of stock to which such shares belong; but if the certificate of incorporation prohibits the reissue of such shares, the authorized capital stock of the corporation of the class to which such shares belong shall, upon such redemption, purchase, retirement, conversion or exchange, be deemed, upon the filing of the certificate required by subsection (e) of this section, reduced to the extent of the total number of such shares.

(e) Whenever any capital of the corporation is applied to the redemption, purchase or retirement of shares pursuant to the provisions of this section, or whenever the certificate of incorporation prohibits the reissue of shares redeemed, purchased or retired with or without the application of capital thereto, or whenever following the conversion or exchange of preferred or special shares of the corporation the capital or the corporation is to be reduced as herein provided, a certificate thereof shall be executed, acknowledged, filed and recorded, and shall become effective in accordance with section 103 of this title. Upon such certificate becoming effective, the capital of the corporation shall be reduced by the amount thereof so applied to such redemption, purchase or retirement or the amount thereof represented by the shares so redeemed or purchased, whichever shall be greater, or in the case of shares redeemed or purchased out of surplus and so retired, by the amount of capital represented by the shares so retired, or, following the conversion or exchange of preferred or special shares of the corporation, by the amount specified by resolution of the board of directors of the corporation in accordance with subparagraph (c) of this section, without the necessity of any other proceedings under any other section of this chapter.

(f) If the certificate of incorporation prohibits the reissue of the shares so redeemed, purchased, retired, or surrendered to the corporation on the conversion or exchange thereof into other shares of the corporation, the filing of such certificate containing a recital of such fact shall constitute an amendment to the certificate of incorporation effecting a reduction in each class of the authorized capital stock of the corporation to the extent of the total number of such shares of such class so redeemed, purchased, retired, or surrendered on conversion or exchange. If the shares so redeemed, purchased, retired, or surrendered on conversion or exchange constitute all the outstanding shares of any particular class and the reissue thereof is so prohibited, the filing of such certificate, containing a recital of such fact, shall constitute an amendment to the certificate of incorporation effecting a reduction in the authorized capital stock of the corporation by the elimination therefrom of all reference to the particular class of stock.

Section 8. Section 251, Title 8, Delaware Code, is amended by deleting subsection (c) and substituting in lieu thereof the following:

(c) The agreement required by subsection (b) shall be submitted to the stockholders of each constituent corporation at an annual or special meeting thereof for the purpose of acting on the agreement. Due notice of the time, place and purpose of the meeting shall be mailed to each holder of stock, whether voting or non-voting, of the corporation at his address as it appears on the records of the corporation, at least 20 days prior to the date of the meeting. At the meeting the agreement shall be considered and a vote taken for its adoption or rejection. If a majority of the outstanding stock of the corporation entitled to vote thereon shall be voted for the adoption of the agreement, that fact shall be certified on the agreement by the secretary or assistant secretary of the corporation under the seal thereof. If the agreement shall be so adopted and certified by each constituent corporation it shall then, in addition to the execution required by subsection (b) of this section, be executed, acknowledged and filed, and shall become effective, in accordance with section 103 of this title. It shall be recorded in the office of the Recorder of the County of this State in which the registered office of each such constituent corporation is located; or if any of the constituent corporations shall have been specially created by a public act of the Legislature, then the agreement shall be recorded in the county where such corporation had its principal place of business in this State.

Section 9. Section 251, Title 8, Delaware Code, is further amended by deleting subsection (f) and substituting the following in lieu thereof:

(f) Notwithstanding the requirements of subsection (c), unless required by its certificate of incorporation, no vote of stockholders of a constituent corporation surviving a merger shall be necessary to authorize a merger if (1) the agreement of merger does not amend in any respect the certificate of incorporation of such constituent corporation, (2) each share of stock of such constituent corporation outstanding immediately prior to the merger becoming effective shall remain outstanding immediately after the merger as an identical share of the surviving corporation, and (3) either no shares of common stock of the surviving corporation and no shares, securities or obligations convertible into such stock are to be issued or delivered under the plan of merger, or the authorized unissued shares or the treasury shares of common stock of the surviving corporation to be issued or delivered under the plan of merger plus those initially issuable upon conversion of any other shares, securities or obligations to be issued or delivered under such plan do not exceed 20 percent of the shares of common stock of such constituent corporation outstanding immediately prior to the effective date of the merger. If an agreement of merger is adopted by the constituent corporation surviving the merger, by action of its board of directors and without any vote of its stockholders pursuant to this subsection, the secretary or assistant secretary of that corporation shall certify on the agreement, under its seal, that the agreement has been adopted pursuant to this subsection and that, as of the date of such certificate, the outstanding shares of the corporation were such as to render this subsection applicable. The agreement so adopted and certified shall then be executed, acknowledged and filed and shall become effective, in accordance with section 103 of this title. Such filing shall constitute a representation by the person who executes the agreement that the facts stated in the certificate remain true immediately prior to such filing.

Section 10. Section 254, Title 8, Delaware Code, is amended by deleting Section 254 and substituting in lieu thereof the following:

§ 254. Merger or consolidation of domestic corporation and joint -stock or other association

(a) The term "joint-stock association" as used in this section, includes any association of the kind commonly known as a joint-stock association or joint-stock company and any unincorporated association, trust or enterprise having members or having outstanding shares of stock or other evidences of financial or beneficial interest therein, whether formed by agreement or under statutory authority or otherwise, but does not include a corporation or partnership. The term "stockholder" as used in this section, includes every member of such joint-stock association or holder of a share of stock or other evidence of financial or beneficial interest therein.

(b) Any one or more corporations of this State may merge or consolidate with one or more joint-stock associations, except a joint-stock association formed under the laws of a state which forbids such merger or consolidation. Such corporation or corporations and such one or more joint-stock association may merge into a single corporation, which may be any one of such corporations, or they may consolidate into a new corporation formed by the consolidation, which shall be a corporation of this State, pursuant to an agreement of merger or consolidation, as the case may be, complying and approved in accordance with this section. The surviving constituent corporation or the new corporation may be organized for profit or not organized for profit and may be a stock corporation or a non-stock corporation.

(c) Each such corporation and joint-stock association shall enter into a written agreement of merger or consolidation, The agreement shall state: (1) the terms and conditions of the merger or consolidation; (2) the mode of carrying the same into effect; (3) the manner of converting the shares of stock of each stock corporation, the interests of members of each non-stock corporation, and the shares, memberships or financial or beneficial interests in each of the joint-stock associations into shares or other securities of a stock corporation surviving or resulting from such merger or consolidation, or into shares or other securities of any other corporation, or into cash or other consideration, or of converting the shares of stock of each stock corporation, the interest of members of each non-stock corporation and the shares, memberships or financial or beneficial interests in each of the joint-stock associations into membership interests of a non-stock corporation surviving or resulting from such merger or consolidation or into cash or other property, as the case may be; and (4) such other details or provisions as are deemed desirable, including, without limiting the generality of the foregoing, a provision for the payment of cash in lieu of the issuance of fractional shares of the surviving or resulting corporation. There shall also be set forth in the agreement such other matters or provisions as shall then be required to be set forth in certificates of incorporation by the laws of this State and that can be stated in the case of such merger or consolidation.

(d) The agreement shall be adopted, approved, executed and acknowledged by each of the stock or non-stock corporations in the same manner as is provided in sections 251 or 255 of this title respectively, and in the case of the joint-stock associations in accordance with their articles of association or other instrument containing the provisions by which they are organized or regulated or in accordance with the laws of the state under which they are formed, as the case may be. The agreement shall be filed and recorded and shall become effective for all purposes of the laws of this State when and as provided in section 251 of this title with respect to the merger or consolidation of corporations of this State.

(e) The provisions of sections 251 (d), 251 (e), 259 through 262 and 328 of this title shall, insofar as they are applicable, apply to mergers or consolidations between corporations and joint-stock associations; the word "corporation" where applicable, as used in those sections, being deemed to include joint-stock associations as defined herein. The personal liability, if any, of any stockholder of a joint-stock association existing at the time of such merger or consolidation shall not thereby be extinguished, shall remain personal to such stockholder and shall not become the liability of any subsequent transferree of any share of stock in such surviving or resulting corporation or of any other stockholder of such surviving or resulting corporation.

(f) Nothing in this section shall be deemed to authorize the merger of a charitable non-stock corporation into a stock corporation, if the charitable status of such non-stock corporation would thereby be lost or impaired, but a stock corporation may be merged into a charitable non-stock corporation which shall continue as the surviving corporation.

Section 11. Section 371, Title 8, Delaware Code, is amended by deleting subsection (b) and inserting in lieu thereof the following:

(b) No foreign corporation shall do any business in this State, through or by branch offices, agents or representatives located in this State, until it shall have paid to the Secretary of State of this State for the use of the State, $50, and shall have filed in the Office of the Secretary of State:

(1) A certificate issued by an authorized officer of the jurisdiction of its incorporation evidencing its corporate existence. If such certificate is in a foreign language, a translation thereof, under oath of the translator, shall be attached thereto.

(2) A sworn statement executed by an authorized officer of each corporation setting forth (1) the name and address of its registered agent in this State, which agent shall be either an individual resident in this State when appointed or another corporation authorized to transact business in this State, (ii) a statement, as of a date not earlier than six months prior to the filing date, of the assets and liabilities of the corporation, and (iii) the business it proposes to do in this State, and a statement that it is authorized to do that business in the jurisdiction of its incorporation.

Section 12. Section 371, Title 8, Delaware Code, is further amended by deleting the word "charter" from the first sentence of subsection (c) and inserting in lieu thereof the words "certificates required by subsection (b) of this section".

Section 13. Section 372, Title 8, Delaware Code, is amended by deleting all of said section and inserting in lieu thereof the following:

§ 372. Additional requirements in case of change of name, change of business purpose or merger or consolidation

(a) Every foreign corporation admitted to do business in this State which shall change its corporate name, or enlarge, limit or otherwise change the 'business which it proposes to do in this State, shall, within thirty days after the time said change becomes effective, file with the Secretary of State a certificate, which shall set forth:

(1) The name of the foreign corporation as it appears on the records of the Secretary of State of this State;

(0) The jurisdiction of its incorporation;

(1) The date it was authorized to do business in this State;

(2) If the name of the foreign corporation has been changed, a statement of the name relinquished, a statement of the new name and a statement that the change of name has been effected under the laws of the jurisdiction of its incorporation and the date the change was effected;

(3) If the business it proposes to do in this State is to be enlarged, limited or otherwise changed, a statement reflecting such change and a statement that it is authorized to do in the jurisdiction of its incorporation the business which it proposes to do in this State.

(b) Whenever a foreign corporation authorized to transact business in this State shall be the survivor of a merger permitted by the laws of the state or country in which it is incorporated, it shall, within thirty days after the merger becomes effective, file a certificate, issued by the proper officer of the state or country of its incorporation, attesting to the occurrence of such event. If the merger has changed the corporate name of such foreign corporation or has enlarged, limited or otherwise changed the business it proposes to do in this State, it shall also comply with subsection (a) of this section.

(c) Whenever a foreign corporation authorized to transact business in this State ceases to exist because of a statutory merger or consolidation, it shall comply with section 381 of this title.

(d) The Secretary of State shall be paid, for the use of the State, $25 for filing and indexing each certificate required by subsection (a) or (b) of this section, and in the event of a change of name an additional $10 shall be paid for a certificate to be issued as evidence of filing the change of name.

Section 14. Section 391 is amended by adding a new subsection (e) as follows:

(e) The Secretary of State may in his discretion permit the filing of any certificate or other paper without first requiring payment of the taxes or fees required by this section, and may in his discretion permit the extension of credit therefor upon such terms as he shall deem to be appropriate.

Section 15. Section 502, Title 8, Delaware Code, is amended by deleting the words, "the first day of March" in subsection (c) and by substituting in lieu thereof the words, "the first day of February".

Section 16. Section 504, Title 8, Delaware Code, is amended by deleting the words, "the fifteenth day of May" in subsection (a) and by substituting in lieu thereof the words, "the fifteenth day of April".

Section 17. Section 504, Title 8, Delaware Code, is amended by deleting the words, "the first day of July" in subsection (c) and by substituting in lieu thereof the words, "the first day of June".

Section 18. Section 506, Title 8, Delaware Code, is amended by deleting the figure, "$20,000" and by substituting in lieu thereof the words, "at least $5,000, but not more than $70,000".

Section 19. Section 618, Title 8, Delaware Code, is amended by striking out the last three sentences thereof and by substituting in lieu thereof the following:

The Provisions of Chapter 5, Corporation Franchise Tax, of Title 8 of the Delaware Code, shall be applicable to a corporation organized pursuant to this Chapter; but in addition to the information called for on the Annual Report of all corporations by those provisions, the Annual Report of a corporation organized pursuant to this Chapter shall certify that its shareholders, directors and officers listed on such report are duly licensed, certified, registered or otherwise legally authorized to render the same professional or other personal service in this State.

Section 20. This Act shall become effective on July 1, 1970.

Approved May 16, 1970.