AN ACT TO AMEND CHAPTER 65 OF THE REVISED CODE OF THE STATE OF DELAWARE OF 1935 RELATING TO CORPORATIONS.
Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met (two-thirds of all the members elected to each branch thereof concurring therein):
Section 1. That Section 5 of Chapter 65 of the Revised Code of Delaware of 1935, being Section 2037 thereof, as amended, be and the same hereby is further amended by striking out all of the last paragraph of such Section and inserting in lieu thereof the following:
"The term 'Certificate of Incorporation' as used in this Chapter, unless the context shall otherwise require, shall include all certificates filed pursuant to Sections 6, 13, 25, 26, 59A, 77A, 80, and the last two sentences in the third paragraphs of Sections 27 and 28, respectively, and any agreement of consolidation or merger filed pursuant to Sections 59, 59B, 59C, or 77A of this Chapter."
Section 2. That Section 6 of Chapter 65 of the Revised Code of Delaware of 1935, being Section 2038 thereof, as amended, be and the same hereby is further amended by striking out all of said Section 6, as amended, and inserting in lieu thereof the following:
"2038. Sec. 6, Certificate; How Signed, Sealed and Acknowledged; Composite Certificate; Recording; When Evidence: --The certificate shall be signed and sealed by each of the incorporators, and shall be acknowledged before any officer authorized by the laws of this State to take acknowledgments of deeds to be the act and deed of the signers, respectively, and that the facts therein stated are truly set forth; said certificate shall be filed in the office of the Secretary of State, who shall furnish a
certified copy of the same under his hand and seal of office, and said certified copy shall be recorded in the office of the Recorder of the County where the principal office of said corporation is to be located in this State, in a book to be kept for that purpose.
"The Secretary of State shall prepare and furnish upon request therefor a certified composite certificate of incorporation which shall contain only such provisions as are in effect at the time of certification by reason . of the certificates and agreements referred to in the last paragraph of Section 5. The Secretary . of State shall make in each case such reasonable charge therefor as he deems proper. Any such certified copy may be recorded in the office of the Recorder of the County wherein the principal office of the corporation is then located in this State.
"A copy of a certificate of incorporation or a composite certificate of incorporation certified by the Secretary of State, accompanied by the certificate of the Recorder of the County wherein the same is recorded under his hand and the seal of his office, stating that it has been recorded, the record of the same in the office of the Recorder aforesaid, or a copy of said record duly certified by the Recorder aforesaid, shall be evidence in all courts of law and equity in this State."
Section 3. That Section 27 of Chapter 65 of the Revised Code of Delaware of 1935, being Section 2059 thereof as amended, be and the same hereby is further amended by striking out the words "pursuant to the provisions of the Certificate of Incorporation" where the same appear in the second paragraph thereof.
Section 4. That Section 30 of Chapter 65 of the Revised Code of Delaware of 1935, being Section 2062 thereof as amended, be and the same hereby is further amended by striking out all of said Section 30, as amended, and inserting in lieu thereof the following:
provided in the Certificate of Incorporation. The first meeting for the election of directors at which meeting any business may be transacted shall be held at any place either within or without this State fixed by a majority of the incorporators in a writing signed by them, and thereafter the said directors shall be elected at the time and place within or without this State named in the by-laws, and which shall not be changed within sixty days next before the day on which the election is to be held. A notice of any change shall be given to each stockholder twenty days before the election is held, in person or by letter mailed to his last known postoffice address. The by-laws may state the city, town or village in which meetings of stockholders for the election of directors, after the first meeting, may be held and authorize the Board of Directors to fix the place within such city, town or village for the holding of such meeting, provided that at least ten days' notice be given to the stockholders of the place so fixed.
"Vacancies and newly created directorships resulting from any increase in the authorized number of directors, may be filled by a majority of the directors then in office, though less than a quorum, unless it is otherwise provided in the Certificate of Incorporation or the by-laws and the directors so chosen shall hold office until the next annual election and until their successors shall be duly elected and qualified, unless sooner displaced; provided, however, that if the directors then in office shall constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), upon application of any stockholder or stockholders holding at least ten per cent. (10%) of the total number of shares of the capital stock of the corporation at the time outstanding having the right to vote for directors, the Chancellor may in his discretion, summarily order an election to be held to fill any such vacancy or vacancies or newly created directorships, or to replace the director or directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 31 of this Chapter in so far as such provisions are applicable. The person or persons elected pursuant to said order shall serve as a director or as directors until the next annual meeting of stockholders and until their successors shall have been duly elected and qualified, and shall displace any person or persons who may
theretofore have been appointed by the directors then in office as aforesaid. The authority to fill newly created directorships granted to the directors by the foregoing amendment shall not be construed to validate any action taken by Directors, prior to the effective date of this Act, in filling such newly created directorship."
Section 5. That Section 31 of Chapter 65 of the Revised Code of Delaware of 1935, being Section 2063 thereof as amended, be and the same hereby is further amended by striking out all of said Section 31, as amended, and inserting in lieu thereof the following:
"2063. Sec. 31. Election of Directors, Managers, Trustees or Governing Body on Failure to Elect on Regular Day; Election Ordered by Chancellor; Contested Elections; Hearing before Chancellor; Service:--If the election for directors, managers, trustees, or governing body of any corporation shall not be held on the day designated by the by-laws, the directors, or in the case of a corporation without capital stock, the directors, managers, trustees or governing body, shall cause the election to be held as soon thereafter as conveniently may be; no failure to elect directors, or in the case of a corporation without capital stock, directors, managers, trustees or governing body, at the designated time shall work any forfeiture or dissolution of the corporation, but the Chancellor may summarily order an election to be held upon the application of any stockholder, or in the case of a corporation without capital stock, any member of the corporation, and at such election the shares of stock, or in the case of a corporation without capital stock, the members, represented at said meeting, either in person or by proxy, shall constitute a quorum for the purpose of such meeting, notwithstanding any provision of the by-laws of the corporation to the contrary.
"Upon the application by any stockholder, or in the case of a corporation without capital stock, any member of the corporation, the Chancellor shall have power to hear and determine the validity of any election of any director, manager, trustee, member of the governing body, or officer of any corporation organized under this Chapter and the right of any person to hold such
office, and in case 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; and in case it should be determined that no valid election of the corporation has been held, the Chancellor shall have power to order an election to be held in accordance with the provisions of the first paragraph of this Section. In any such application service of copies of such petition upon the corporate resident agent of the corporation shall be deemed to be service upon the corporation and upon the person whose title to office is contested and upon the person, if any, claiming such office; and it shall be the duty of such resident agent to forward immediately a copy of said petition so delivered to him, or it, to the corporation and to the person whose title to office is contested and to the person, if any, claiming such office, in a postpaid, sealed, registered letter addressed to such corporation or such person at his or its last known post-office address; and the Chancellor may make such further or other order respecting notice of such application as he may deem proper under the circumstances.
"Whenever, by reason of an equally divided vote of the stockholders, there shall be a failure to elect directors, and such failure for such reason shall exist at two successive annual elections, or in the event there shall be a failure to elect directors by reason of an equally divided vote at an election held in accordance with the provision of the first paragraph of this section, the Chancellor, on application of any stockholder, may, in his discretion, appoint one or more persons to be receivers of and for such corporation, with all the powers and title of a receiver appointed under Section 41 of Chapter 117 and, in addition thereto, the power to continue the corporate business until otherwise ordered by the Chancellor.
"The Chancellor in any proceeding instituted under this Section shall have power to determine the right and power of persons claiming to own stock, or in the case of a corporation without capital stock of the persons claiming to be members, to vote at any meeting of the stockholders, or in the case of a corporation without capital stock, the members, authorized by or referred to in this Section.
"The Chancellor shall have the power to appoint a Master to hold any election provided for in this Section under such orders and powers as he shall deem proper; and he shall also have power to punish any officer or director for contempt, in case of disobedience of any order made by the Chancellor and may, in case of disobedience by any such corporation of any order made by the Chancellor, in his discretion, enter a decree against such corporation for a penalty in a sum not exceeding the sum of Five Thousand Dollars ($5,000.00)."
Section 6. That Section 39 of Chapter 65 of the Revised Code of Delaware of 1935, being Section 2071 thereof, as amended, be and the same hereby is further amended by inserting the words "directors or" after the words "no meeting of" and before the word "stockholders," in the second paragraph thereof.
Section 7. That Section 61 of Chapter 65 of the Revised Code of Delaware of 1935, being Section 2093 thereof, as amended, be and the same hereby is further amended by strikout all of the first paragraph of said Section 61 and by inserting in lieu thereof the following:
"The corporation resulting from or surviving any consolidation or merger as aforesaid shall within ten days after the date on which the agreement of consolidation or merger has been filed and recorded, as aforesaid, notify each stockholder in any corporation of this State consolidating or merging as aforesaid, who objected thereto in writing and whose shares were not voted in favor of such consolidation or merger, and who filed such written objection with the corporation before the taking of the vote on such consolidation or merger, that said agreement has been filed and recorded, by registered mail, return receipt requested, addressed to said stockholder at his last known address as appears on the books of the corporation and if any such stockholders shall within twenty days after the date of mailing of said notice demand in writing, from the corporation resulting from or surviving such consolidation or merger, payment for his stock, such resulting or surviving corporation shall, within thirty days after the expiration of said period of twenty days, pay to him the value of his stock on the date of the record-
ing of said agreement of consolidation or merger, exclusive of any element of value arising from the expectation or accomplishment of such consolidation or merger.. If during said period of thirty days the corporation and any such stockholder fail to agree as to the value of such stock, any such stockholder, or the corporation resulting from or surviving such consolidation or merger, may by petition filed in the Court of Chancery within four months after the expiration of said period of thirty days demand a determination of the 'value of the stock of all such stockholders by an appraiser to be appointed by the Court."
by striking out all of the. fourth paragraph of said Section 61, as amended, and by inserting in lieu thereof the following:
"The appraiser shall determine the value of the stock of the stockholders adjudged by the Chancellor to be entitled to payment therefor and shall file his report respecting such value in the office of the Register in Chancery and notice of the filing of such report shall be given by the Register in Chancery to the parties in interest. Such report shall be subject to exceptions to be heard before the Court both upon the law and facts. The Court shall by its decree determine the value of the stock of the stockholders entitled to payment therefor and shall direct the payment of such value, together with interest, if any, as hereinafter provided, to the stockholders entitled thereto by the resulting or surviving corporation upon the transfer to it of the certificates representing such stock, which decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such resulting or surviving corporation be a corporation of this State or of any other State of the United States of America. The shares of the surviving or resulting corporation into which the shares of such dissenting stockholders would have been converted had they assented to the consolidation or merger shall have the status of authorized and unissued shares of the surviving or resulting corporation, as the case may be."
and by striking out all of the fifth paragraph of said Section 61, as amended, and by inserting in lieu thereof the following:
"The cost of any such appraisal, including a reasonable fee to and the reasonable expenses of the appraiser, but exclusive
of fees of counsel or of experts retained by any party, may on application of any party in interest be determined by the Court and taxed upon the parties to such appraisal or any of them as may appear to be equitable, except that the cost of giving the notice by ,publication and by registered mail hereinabove provided for shall be paid by the corporation. The Court may, on application of any party in interest, determine the amount of interest, if any, to be paid upon the value of the stock of the stockholders entitled thereto."