HOUSE BILL NO. 16
AS AMENDED BY SENATE AMENDMENT NO. 1
AN ACT TO AMEND CHAPTER 1, TITLE 8, DELAWARE CODE, RELATING TO THE GENERAL CORPORATION LAW.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Two-thirds of all members elected to each House thereof concurring therein):
Section 1. Amend Section 145 of the Delaware General Corporation Law by adding a new subsection (i) to read as follows:
"(i) For purposes of this Section, references to 'other enterprises' shall Include employee benefit plans; references to 'fines' shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to 'serving at the request of the corporation' shall Include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be In the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner 'not opposed to the best interests of the corporation' as referred to in this Section."
Section 2. Amend Section 203(a) (1) of Title 8, Delaware Code by deleting the first sentence thereof and inserting in lieu thereof the following:
"Not less than 20 nor more than 60 days before the date the tender offer is to be made, the offeror shall deliver personally or by registered or certified mail to the corporation whose equity securities are to be subject to the tender offer, at its registered office in this State or at its principal place of business, a written statement of the offeror's intention to make the tender offer."
Section 3. Amend Section 203(a) (2) of Title 8, Delaware Code by deleting therefrom the words "...for an additional period or.
Section 4. Amend Section 211(c) of Title 8, Delaware Code, by deleting the third sentence thereof and inserting in lieu thereof a new third sentence to read as follows:
"If there be a failure to hold the annual meeting for a period of thirty days after the date designated therefor, or if no date has been designated, for a period of thirteen months after the organization of the corporation or after its last annual meeting, the Court of Chancery may summarily order a meeting to be held upon the application of any stockholder or director."
Section 5. Amend Section 215(a) of Title 8, Delaware Code by inserting therein the words "and 216" so that Section 215(a) reads as follows:
(a) The provisions of Sections 211-214, and 216 of this Title shall not apply to corporations not authorized to issue stock.
Section 6. Amend Section 215(c) of Title 8, Delaware Code by adding a second sentence thereto, to read as follows:
"In the absence of such specification in the certificate of incorporation or by-laws of a non-stock corporation, one-third of the members of such corporation shall constitute a quorum at a meeting of such members, and the affirmative vote of a majority of such members present In person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the members, unless the vote of a greater number is required by this chapter, the certificate of incorporation or by-laws."
Section 7. Amend Section 216 of Title 8, Delaware Code by deleting all of Section 216 and inserting in lieu thereof a new Section 216 to read as follows:
"216. QUORUM AND REQUIRED VOTE FOR STOCK CORPORATIONS.
Subject to this chapter in respect of the vote that shall be required for a specified action, the certificate of Incorporation or by-laws of any corporation authorized to issue stock may specify the number of shares and/or the amount of other securities having voting power the holders of which shall be present or represented by proxy at any meeting In order to constitute a quorum for, and the votes that shall be necessary for, the transaction of any business. In the absence of such specification in the certificate of incorporation or by-laws of the corporation, (i) a majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at a meeting of stockholders, but in no event shall a quorum consist of less than one-third of the shares entitled to vote at the meeting; (ii) the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders; and, (iii) where a separate vote by class is required, the affirmative vote of the majority of shares of such class present in person or represented by proxy at the meeting shall be the act of such class."
Section 8. Amend Section 218(a) of Title 8, Delaware Code by deleting all of the second sentence thereof, which begins with the words "The validity of a voting trust..."
Section 9. Amend Section 220 of Title 8, Delaware Code by changing the Title thereof to read "Inspection of Books and Records" and by adding a new subsection (d) to read as follows:
"(d) Any director shall have the right to examine the corporation's stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to his position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The court may summarily order the corporation to permit the director to Inspect any and all books and records, the stock ledger and the stock list and to make copies or extracts therefrom. The court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the court may deem just and proper."
Section 10. Amend Section 223 of Title 8, Delaware Code by deleting the first sentence of Section 223 (a) and inserting in lieu thereof the following sentence:
"Unless otherwise provided in the certificate of incorporation or by-laws:
(1) vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director;
(2) whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected."
Section 11. Amend Section 225 of Title 8, Delaware Code by deleting the first sentence thereof and inserting in lieu thereof a new first sentence to read as follows:
"Upon application of any stockholder or director, or any member of a corporation without capital stock, the Court of Chancery may hear and determine the validity of any election of any director, member of the governing body, or officer of any corporation, and the right of any person to hold such office, and, in ease any such office is claimed by more than one person, may determine the person entitled thereto; and to that end make such order or decree in any such case as may be just and proper, with power to enforce the production of any books, papers and records of the corporation relating to the Issue."
Section 12. Amend Section 242(c) (2) of Title 8, Delaware Code, by deleting the last sentence thereof and inserting in lieu thereof a new sentence to read as follows:
"The number of authorized shares of any such class or classes of stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the corporation entitled to vote irrespective of the provisions of this paragraph (e) (2), if so provided in the original certificate of incorporation, in any amendment thereto which created such class or classes of stock or which was adopted prior to the Issuance of any shares of such class or classes of stock, or in any amendment thereto which was authorized by a resolution or resolutions adopted by the affirmative vote of the holders of a majority of such class or classes of stock."
Section 13. Amend Title 8, Delaware Code, Section 253, by changing subsection (d) thereof to read as follows:
"(d) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under this Section is not owned by the parent corporation immediately prior to the merger, the stockholders of the subsidiary Delaware corporation party to the merger shall have appraisal rights as set forth in Section 262 of tliis Title."
Section 14. Amend Title 8 Delaware Code, Section 262 by deleting such section in its entirety and inserting in lieu thereof a new Section to read as follows:
"(a) Any stockholder who has complied with the provisions of subsection (d) of this Section and has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to Section 228 of this Chapter shall be entitled to an appraisal by the Court of Chancery of the fair value of his shares of stock under the circumstances described in subsections (b) and (c). As used in this Section, the word 'stockholder' means a holder of record of stock in a stock corporation and also a member of record of a non-stock corporation; the wo: s 'stock' and 'share' mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a non-stock corporation.
(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger to be effected pursuant to Sections 251, 252, 254, 257 or 258 of this Chapter;
(1) provided, however, that no appraisal rights under this Section shall be available for the shares of any class or series of stock which, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either a) listed on a national securities exchange or OD held of record by more than 2,000 stockholders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of Section 251 of this Chapter.
(2) Notwithstanding the provisions of subsection (b) (1) of this Section, appraisal rights under this Section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to Sections 251, 252, 254, 257 and 258 of this Chapter to accept for such stock anything except (i) shares of stock of the corporation surviving or resulting from such merger or consolidation; (ii) shares of stock of any other corporation which at the effective date of the merger of consolidation will be either listed on a national Securities exchange or held of record by more than 2,000 stockholders; (iii) each in lieu of fractional shares of the corporations described in the foregoing clauses (i) and (ii); or (iv) any combination of the shares of stock and cash in lieu of fractional shares described in the foregoing clauses (i), (10 and (iii) of this subsection.
(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under Section 253 of this chapter is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
(e) Any corporation may provide in its certificate of incorporation that appraisal rights under this Section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. In such event, the procedures of this Section, including those set forth in subsections (d) and (e), shall apply as nearly as Is practicable.
(d) Appraisal rights shall `)e perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are provided under this Section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders entitled to such appraisal rights that appraisal rights are available for any or all of the shares of the constituent corporations, lind shall include in such notice a copy of this Section. Each stockholder electing to demand the appraisal of his shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of his shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of his shares; provided, however, that such demand must be in addition to and separate from any proxy or vote against the merger. Within 10 days after the effective date of ;Itch merger or consolidation, the surviving corporation shall notify each stockholder of each constituent corporation who has complied with the provisions of this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section 228 or Section 253 of this Chapter, the surviving corporation, either before the effective date of the merger or within 10 days thereafter, shall notify each of the stockholders entitled to appraisal rights of the effective date of the merger or consolidation and that appraisal rights are available for any or all of the shares of the constituent corporation, and shall include in such notice a copy of this Section. The notice shall be sent by certified or registered mail, return receipt requested, addressed to the stockholder at his address as it appears on the records of the corporation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of the notice, demand in writing from the surviving corporation the appraisal of his shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or consolidation, the corporation or any stockholder who has complied with the provisions of subsections (a) and (d) hereof and who is otherwise entitled to appraisal rights, may file a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw his demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after his written request for such a statement is received by the corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) hereof, whichever is later.
(a) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the corporation. If the petition shall be filed by the corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by one or more publications at least one week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the corporation.
(a) At the hearing on such petition, the Court shall deteNnine the stockholders who have complied with the provisions of this Section and who have become entitled to appraisal rights. The Court nay require the stockholders who have demanded an appraisal for their shares to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.
(a) After determining the stockholders entitled to an appraisal, the Court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger, together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. In determining the fair rate of interest, the Court nay consider all relevant factors, including the rate of interest which the corporation would have had to pay to borrow money during the pendency of the proceeding. Upon application by the corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court inay, in its discretion, permit discovery or other pretrial proceedings and may proceed to trial upon the appraisal prior to the final determination of the stockholder entitled to an appraisal. Any stockholder whose name appears on the list filed by the corporation pursuant to subsection (f) of this Section arid who has submitted his certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that he is not entitled to appraisal rights under this Section.
(a) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees of the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any other state.
(a) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of n stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limit/Moil, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the value of all of the shares entitled to an
(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded his appraisal rights as provided in subsection (d) of this Section shall be entitled to vote such- stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this Section, or if such stockholder shall deliver to the corporation a written withdrawal of his demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this Section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation into which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.'
Section 15. Amend Section 377 of Title 8, Delaware Code by deleting Subsection 377(a) and inserting in lieu thereof a new Subsection 377(a) to read as follows:
"(a) Any foreign corporation, which has qualified to do business in this State may change its registered agent and substitute another registered agent by filing a certificate with the Secretary of State, acknowledged in accordance with Section 103 of this title, setting forth (1) the name and address of its registered agent designated in this State upon whom process directed to said corporation may be served, and (2) a revocation of all previous appointments of agent for such purposes. Such registered agent shall be either an individual residing in this State when appointed or a corporation authorized to transact business in this State."
Section 16. This act shall become effective 30 days after it becomes law.
Approved June 6, 1981.