Delaware Transactional & Corporate Law Update Recent

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Delaware Transactional & Corporate Law Update

September 10, 2014

Recent Amendments to the

Delaware LLC and LP Acts:

Permitting Revocation of

Dissolution Without a Unanimous

Vote, Confirming Permissibility of

Future-Effective Written Consents,

and Other Changes

By Norman M. Powell and John J. Paschetto

Recent amendments to the Delaware Limited

Liability Company Act (the “DLLCA”) and the

Delaware Revised Uniform Limited Partnership

Act (the “DRULPA”) have, among other chang-

es, replaced with less-burdensome alternatives

the unanimous-vote requirements for revoking

the dissolution of a limited liability company (an

“LLC”) or a limited partnership (an “LP”), and

confirmed that action can be taken by members

or managers of an LLC, or limited or general

partners of an LP, by means of written consent

even if the consent was signed at a time when

such persons were not yet members, managers,

or partners. These amendments went into effect

on August 1, 2014.

Revocation of Dissolution of LLCs and LPs

Without Unanimous Votes

Under the DLLCA and DRULPA, the dissolu-

tion of an LLC or LP is separate from, and pre-

cedes, the termination of the LLC’s or LP’s ex-

istence.

Dissolution, by itself, commences a

period of indefinite length during which the LLC

or LP is to wind up its affairs in preparation for

its death as a juridical person. 6 Del. C. §§ 18-

803(b) (winding-up of LLC), 17-803(b) (wind-

ing-up of LP). The LLC or LP finally ceases to

exist upon the effectiveness of a certificate of

cancellation filed with the Delaware Secretary of

The same is true for Delaware corporations.

See 8 Del. C. § 278.

State. 6 Del. C. §§ 18-203(a) (LLC certificate of

cancellation), 17-203(a) (LP certificate of can-

cellation).

During the period between an LLC’s or LP’s

dissolution and death, it is not uncommon for

those who own or control the entity to wish to

revoke the dissolution. This may happen if the

dissolution was inadvertent (e.g., by the trigger-

ing of a provision in an LLC or LP agreement

providing for automatic dissolution), or if an

unanticipated beneficial transaction did not sur-

face until after dissolution.

Before the 2014 amendments, the DLLCA and

DRULPA required the unanimous vote of the

remaining members or the remaining general

and limited partners, respectively, for dissolution

to be revoked. Moreover, if the entity had been

dissolved pursuant to a vote of the members or

partners, dissolution could not be revoked unless

every person who voted for dissolution also vot-

ed to revoke it. Thus, the mere unavailability or

indifference of a single person could prevent a

value-creating transaction involving the dis-

solved entity.

Almost entirely rewriting § 18-806 of the

DLLCA and § 17-806 of the DRULPA, the

2014 amendments have made revocation of dis-

solution considerably easier to accomplish. The

amendments have done away with the blanket

requirement of a unanimous vote by remaining

Inside this Update . . .

Delaware’s General Corporation

Law Is Amended Regarding

Future-Effective Written Consents,

Unavailable Incorporators, and

Two-Step Acquisitions, Among

Other Changes ............................. page 4

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Delaware Transactional & Corporate Law Update

members or partners, and the requirement of a

unanimous vote of all persons who voted in fa-

vor of dissolution if the LLC or LP was dis-

solved pursuant to a vote. Those requirements

have been replaced with a series of alternative

revocation methods whose availability depends

in part on how dissolution was effected.

First, if the entity was dissolved pursuant to a

vote, then its dissolution may be revoked by such

vote. 6 Del. C. §§ 18-806(i), 17-806(i). Thus,

where dissolution was effected by vote under the

default provisions of the DLLCA or DRULPA,

the dissolution may now be revoked by the same

vote—i.e., the vote of members owning more

than two thirds of all the members’ interests in

profits, in the case of an LLC (6 Del. C. § 18-

801(a)(3)), and the vote of all general partners

plus the vote of limited partners owning more

than two thirds of all the limited partners’ inter-

ests in profits, in the case of an LP (6 Del. C.

§ 17-801(2)). Similarly, if dissolution was ef-

fected pursuant to the vote of some different

proportion as set forth in the LLC or LP agree-

ment, that proportion would govern a vote to

revoke dissolution. There is now no require-

ment that the revocation be approved by the

same persons who voted for the dissolution.

Second, if dissolution resulted from the expira-

tion of a time period or the occurrence of an

event as set forth in the LLC or LP agreement,

that dissolution can be revoked by whatever vote

is required to amend the provision in the LLC or

LP agreement that caused it. 6 Del. C. §§ 18-

806(ii), 17-806(ii). Note, however, that this al-

ternative does not apply if the “event” causing

dissolution was a vote to dissolve, the withdraw-

al of a general partner (in the case of an LP), or

an event that caused the last remaining member

or limited partner to cease to be a member or

limited partner. Id. The revocation of a dissolu-

tion resulting from those “events” is covered by

other subsections of §§ 18-806 and 17-806, as

discussed above and in the next paragraph.

Third, in the case of an LLC, if dissolution re-

sulted from an event that caused the last remain-

ing member to cease to be a member, revocation

can be achieved by the vote of the personal rep-

resentative of the last remaining member or the

vote of “the assignee of all of the [LLC] interests

in the [LLC.]” 6 Del. C. § 18-806(iii). In the

case of an LP, if dissolution resulted from the

withdrawal of a general partner or an event that

caused the last remaining limited partner to

cease to be a limited partner, revocation can be

achieved by the vote of all remaining general

partners and, where any limited partners remain,

the vote of the limited partners owning more

than two thirds of all the limited partners’ inter-

ests in profits. If no limited partners remain, the

requirement of their vote can be satisfied by the

vote of the personal representative of the last

remaining limited partner or the vote of “the as-

signee of all of the limited partners’ partnership

interests in the limited partnership[.]” 6 Del. C.

§ 17-806(iii).

The amendments also confirm that an LLC or

LP agreement may specify “the manner in which

a dissolution may be revoked” or may prohibit

revocation of dissolution altogether. They fur-

ther provide that §§ 18-806 and 17-806 “shall

not be construed to limit the accomplishment of

a revocation of dissolution by other means per-

mitted by law”—a recognition that under certain

circumstances, it may be possible to revoke dis-

solution by, for example, merging a dissolved

LLC or LP into an entity that has not been dis-

solved.

As they did prior to the 2014 amendments,

§§ 18-806 and 17-806 continue to provide that

dissolution may not be revoked once a certificate

of cancellation has been filed for the dissolved

entity. They also continue to require the admis-

sion of a member when the dissolution of an

LLC with no remaining members is revoked,

and the appointment of a general partner or a

limited partner when the dissolution of an LP

with no remaining general or limited partners is

revoked (with new text that specifically address-

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Delaware Transactional & Corporate Law Update

es when an LP has no remaining partners at all,

whether general or limited).

Future-Effective Consents by Members,

Managers, and Partners

As discussed in the accompanying article (be-

ginning on the next page), the General Corpora-

tion Law of the State of Delaware (the “DGCL”)

has been amended effective August 1, 2014, to

expressly permit the use of future-effective writ-

ten consents by directors and stockholders of

Delaware corporations. To confirm that future-

effective consents are permitted also with re-

spect to Delaware LLCs and LPs, similar

amendments have also been made to the

DLLCA and DRULPA. These amendments

provide that any consent given by a person “as a

member” or a manager of an LLC, or as a lim-

ited or general partner of an LP, whether or not

such person is “then a member” (or manager or

partner), may be made effective as of a future

time, and “such person shall be deemed to have

consented” in such capacity as of such future

time if such person is a member (or manager or

partner) as of such future time. 6 Del. C. §§ 18-

302(d) (member consent), 18-404(d) (manager

consent), 17-302(e) (limited partner consent),

17-405(d) (general partner consent).

In several respects, the future-effective consent

amendments to the DLLCA and the DRULPA

permit greater flexibility than those made to the

DGCL. First, future-effective consents in the

LLC or LP context, unlike future-effective direc-

tor and stockholder consents, may be made more

than 60 days before their future effectiveness.

Second, unlike a stockholder, a member or part-

ner need not provide to the entity evidence of an

instruction or provision regarding a consent’s

future effectiveness for the consent to be deemed

given at the future time. Third, the DLLCA and

DRULPA amendments are silent regarding what

steps a person must take to provide for future

effectiveness, whereas the DGCL amendments

refer to “instruction to an agent or otherwise[.]”

8 Del. C. §§ 141(f), 228(c). Fourth, the DLLCA

and DRULPA amendments expressly recognize

(as is common in those Acts) that an LLC or LP

agreement may opt out of the statutory future-

effectiveness rules.

Records Identifying Members, Managers,

and Partners

The 2014 amendments have added provisions to

the DLLCA and DRULPA that expand the role

of the “communications contact” that every LLC

and LP has been required to have since 2006.

6 Del. C. §§ 18-104(g) (for LLCs), 17-104(g)

(for LPs).

A communications contact is a natu-

ral person whose name, business address, and

business phone number are provided to the enti-

ty’s registered agent in Delaware, and who is

authorized by the entity to receive communica-

tions from the registered agent.

Provisions added by the 2014 amendments re-

quire that every LLC and LP, when requested by

its communications contact, “shall provide the

communications contact with the name, business

address and business telephone number of a nat-

ural person who has access to the record re-

quired to be maintained pursuant to § 18-305(h)

of this title [or, in the case of an LP, § 17-

305(g)].” Id. Sections 18-305(h) and 17-305(g)

of Title 6, which are new, in turn provide that

every LLC or LP “shall maintain a current rec-

ord that identifies the name and last known

business, residence or mailing address” of each

member and manager (in the case of an LLC)

and each general and limited partner (in the case

Presumably, a corporation may also opt out,

by means of a provision in its certificate of

incorporation in the case of stockholder con-

sents, and by means of a provision in its cer-

tificate of incorporation or bylaws in the case

of director consents. 8 Del. C. §§ 141(f) (di-

rector consent), 228(a) (stockholder consent).

Delaware corporations are also required to

have communications contacts. 8 Del. C.

§ 132(d).

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Delaware Transactional & Corporate Law Update

of an LP). Thus, an LLC or LP is now required

to maintain a record similar to the list of stock-

holders that a corporation must periodically pre-

pare, and make available for inspection by

stockholders, pursuant to § 219 of the DGCL.

8 Del. C. § 219. Moreover, the DLLCA and

DRULPA amendments have, in effect, estab-

lished a chain of communication through which

an LLC’s or LP’s registered agent in Delaware

(whose identity and address are a matter of pub-

lic record) can convey to the entity’s communi-

cations contact (whose contact information the

registered agent must have) a request for the

record of members, managers, or partners that

the entity is now required to maintain. The cir-

cumstances under which the possessor of that

record may be compelled to provide it are be-

yond the scope of the amendments.

Exercise of Informational Rights Through

an Agent

Lastly, the 2014 amendments have increased the

similarity of the informational rights of members

and limited partners to those of stockholders.

The DLLCA and DRULPA provisions dealing

with the rights of members (of an LLC) and lim-

ited partners (of an LP) to obtain information

about the entity have been amended to provide

that members and limited partners may assert

such rights not only “in person” but also “by

attorney or other agent[.]” 6 Del. C. §§ 18-

305(a) (for LLCs), 17-305(a) (for LPs). If the

member or limited partner acts through an attor-

ney or other agent, the demand for information

must be accompanied by “a power of attorney or

such other writing which authorizes the attorney

or other agent to so act on behalf of the member

[or limited partner].” §§ 18-305(e), 17-305(d).

This language tracks that of § 220 of the DGCL,

which sets forth a stockholder’s right to inspect

books and records of a corporation. 8 Del. C.

§ 220.

Delaware’s General Corporation

Law Is Amended Regarding

Future-Effective Written Consents,

Unavailable Incorporators, and

Two-Step Acquisitions, Among

Other Changes

By Norman M. Powell and John J. Paschetto

The Delaware legislature recently adopted

amendments to the State’s General Corporation

Law (the “DGCL”) that should, among other

things, simplify a variety of common transac-

tions. The amendments, which went into effect

on August 1, 2014, include (i) confirming that

individuals can effectively provide written con-

sents as directors even if they are not directors

when they actually sign the consents;

(ii) streamlining the means by which the organi-

zation of a corporation can be completed when

the incorporator is unavailable or uncooperative;

and (iii) refining the new short-form merger pro-

cedure in two-step acquisitions that was intro-

duced last year. Of perhaps equal importance,

however, is a widely anticipated amendment that

was not made.

Possible Legislation on Fee-Shifting Bylaws

On May 8, 2014, the Delaware Supreme Court

issued an opinion in which it held, among other

things, that the board of a Delaware nonstock

corporation could validly adopt a bylaw under

which any member that unsuccessfully sues the

corporation or another member would be re-

quired to bear the litigation expenses of the cor-

poration or defendant member. ATP Tour, Inc.

v. Deutscher Tennis Bund, 91 A.3d 554, 557-58

(Del. 2014). This ruling, in response to one of

four questions certified by the United States Dis-

trict Court for the District of Delaware, dealt

only with the challenged bylaw’s facial validity,

and spoke only in the context of a nonstock cor-

poration. Many practitioners, however, have

viewed the court’s reasoning in ATP Tour as

equally valid in the case of stock corporations.

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Delaware Transactional & Corporate Law Update

It was therefore expected that boards of Dela-

ware stock corporations would adopt fee-shifting

bylaws, as has since occurred to an apparently

limited extent.

The committee of the Delaware State Bar Asso-

ciation responsible for proposing amendments to

the DGCL drafted amendments that would have

prevented application of ATP Tour to stock cor-

porations. But on June 18, 2014, the Delaware

Senate adopted a joint resolution requesting

Delaware’s corporate bar to “continue its ongo-

ing examination” and consider what legislation,

if any, may be appropriate on this issue. Del. S.

J. Res. 12, 147th Gen. Assem. (2014). Legisla-

tive consideration of any amendments on the

subject of fee-shifting bylaws has thus been ef-

fectively postponed until 2015.

Future-Effective Consents by Directors and

Stockholders

Among the default rules of corporate govern-

ance under the DGCL is that a board of directors

may take action without a meeting if the direc-

tors unanimously consent in writing to the ac-

tion. 8 Del. C. § 141(f). Like telephonic meet-

ings, unanimous consents have become one of

the indispensable features of modern board pro-

cedure. And on occasion, in the interests of effi-

ciency and certainty, signatures to a board con-

sent are collected from individuals who are not

yet, but soon will be, directors. This strategy is

particularly valuable in the context of a corpo-

rate acquisition, in order that certain actions

(such as replacing senior officers) can be effect-

ed immediately after the new board is seated,

without requiring the incoming directors to hold

themselves in readiness to act as soon as they get

word of their election. Typically, when a board

See, e.g., Tom Hals, U.S. companies adopt

bylaws that could quash some investor law-

suits, REUTERS, July 7, 2014, available at

http://www.reuters.com/article/2014/07/07/us

-usa-litigation-companies-

idUSKBN0FC26O20140707.

consent is signed before the signers become di-

rectors, the signature pages are held by counsel

until the consent’s intended time of effective-

ness.

While this practice was generally viewed as

permissible under the DGCL, an unreported

United States District Court opinion, applying

Delaware law, cast doubt on its effectiveness.

U.S. Bank Nat’l Ass’n v. Verizon Commc’ns

Inc., No. 3:10-CV-1842-G (N.D. Tex. Aug. 8,

2012). On its motion for partial summary judg-

ment, the plaintiff argued that a purportedly

unanimous written consent by one defendant’s

board of directors was invalid because two indi-

viduals had signed it the day before they became

directors. In response, the defendants main-

tained that the signatures of those individuals

were properly “held” by counsel until the indi-

viduals were duly seated on the board. Id. at

6-7. The court, however, after noting the weak

evidentiary support for this factual contention,

appeared to hold that even if the challenged sig-

nature pages had been held in escrow, they were

invalid because action taken by individuals

when they are not directors cannot “be carried

forward” to a time when they are. Id. at 7 (rely-

ing in part on AGR Halifax Fund, Inc. v. Fiscina,

743 A.2d 1188 (Del. Ch. 1999)).

The 2014 amendments to the DGCL have now

settled this issue under Delaware law, confirm-

ing that a board consent is not necessarily inva-

lid if some or all of the directors were not yet

directors when they actually signed it. The

amendments also make clear that such consents

need not be subject to a formal escrow arrange-

In AGR Halifax Fund, the Delaware Court of

Chancery invalidated action taken pursuant to

a board consent signed by several individuals

before they became directors. 743 A.2d at

1194-95. However, it does not appear from

the opinion that the consent was to be es-

crowed, or that if so, the possible effect of

escrow was presented to the court.

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Delaware Transactional & Corporate Law Update

ment to be effective. As amended, § 141(f) of

the DGCL provides that any director consent

(including one signed by a person who is “not

then a director”) may be made effective as of a

future time, including the happening of a future

event, “whether through instruction to an agent

or otherwise[.]” The consent will be deemed to

have been given at the future effective time if

(a) that time is no more than 60 days “after such

instruction is given or such provision is made”

regarding future effectiveness, (b) the person

who signed the consent is a director when the

consent is to become effective, and (c) the con-

sent has not previously been revoked. Every

such consent “shall be revocable prior to its be-

coming effective.” 8 Del. C. § 141(f).

A similar amendment has been made to the

DGCL provisions dealing with written consents

by stockholders. 8 Del. C. § 228. Language

added to § 228(c) provides that, “whether

through instruction to an agent or otherwise,” a

stockholder consent may be made effective as of

a time up to 60 days in the future. If “evidence”

of the instruction or provision regarding future

effectiveness is furnished to the corporation,

“such later effective time shall serve as the date

of signature.” Unlike future-effective consents

given by directors, such a stockholder consent

may provide that it is irrevocable. Id.

The legislative synopsis pertaining to the 2014

DGCL amendments makes the important point

that the amendment to § 228(c) “does not affect

the requirement that the consent bear the actual

date of signature.” In addition, the synopsis ex-

plains that the amendment to § 228(c) does not

“expressly state [that] the signatory need not be

a stockholder when the consent is signed[,]” be-

cause “under current law” the person signing the

consent must be a stockholder “only on the rele-

vant record date.” Del. H.B. 329 syn. § 5, 147th

Gen. Assem. (2014).

Perfecting Corporate Organization in the

Absence of the Incorporator

Under Delaware law, a corporation’s initial cer-

tificate of incorporation must be signed by one

or more “incorporators.” 8 Del. C. § 103(a)(1).

In addition, an initial certificate of incorporation

may, but need not, state the names and addresses

of the corporation’s initial directors. 8 Del. C.

§ 102(a)(6). When the initial directors are

named in the certificate of incorporation, any

authority of the incorporator terminates upon the

filing and effectiveness of the certificate of in-

corporation, and the initial directors then have

exclusive authority to perfect the corporation’s

organization. Id.; see also 8 Del. C. § 108(a).

More commonly, however, certificates of incor-

poration do not name the initial directors, some-

times in the interest of privacy, and sometimes

simply because the selection of the initial direc-

tors has not yet been finalized when the certifi-

cate of incorporation is filed.

When the initial directors have not been named

in the certificate of incorporation, the incorpora-

tor has the exclusive authority to elect them.

Until the incorporator does so, the corporation is

effectively paralyzed. Without a board of direc-

tors, it has no power to issue stock, with the re-

sult that the ability to elect directors to manage

the business and affairs of the corporation can-

not be shifted from the incorporator to stock-

holders.

Not infrequently, once a certificate of incorpora-

tion is filed, the interested parties fail to see that

the incorporator finishes the job by electing the

initial directors. Years sometimes pass before

this oversight is detected, and in such situations,

the incorporator may be impossible to locate or,

if located, unwilling to cooperate. A somewhat

cumbersome remedy for the missing or inert

incorporator was possible before the 2014

amendments, by means of DGCL § 103(a)(1)

(which has also been amended this year, as dis-

cussed below). Under that section, if one of

several specified circumstances caused an incor-

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Delaware Transactional & Corporate Law Update

porator to be unavailable (and the initial direc-

tors were not named in the certificate of incorpo-

ration), any person for whom the incorporator

had acted in signing the certificate of incorpora-

tion could sign any other filing with the Dela-

ware Secretary of State until the initial board

was elected. Relying on this provision, the prin-

cipal for whom the incorporator had acted could

sign and file a certificate of amendment that

would add to the certificate of incorporation a

provision naming a cooperative individual as the

initial director. Then, as the initial director, that

individual would proceed to complete the corpo-

ration’s organization (adopting bylaws, electing

officers, authorizing the initial issuances of

stock, etc.).

The 2014 amendments have made the unavaila-

bility of an incorporator much easier to over-

come. Under new § 108(d), “[i]f any incorpora-

tor is not available to act, then any person for

whom or on whose behalf the incorporator was

acting directly or indirectly as employee or

agent, may take any action that such incorpora-

tor would have been authorized to take” pursu-

ant to the DGCL. Thus, no filing must now be

made with the Delaware Secretary of State to

enable the principal of an unavailable incorpora-

tor to step into the incorporator’s shoes. The

only associated formality is that any instrument

signed by the principal in place of the incorpora-

tor (and the minutes of any meeting where the

principal acts in concert with multiple incorpora-

tors) must state that the incorporator is unavaila-

ble, “the reason therefor,” that the incorporator

was acting “directly or indirectly as employee or

agent” for the principal, and that the principal’s

signature (or participation in an incorporators’

meeting) “is otherwise authorized and not

wrongful.” 8 Del. C. § 108(d).

An amendment regarding incorporator unavaila-

bility has also been made to § 103(a)(1) of the

DGCL. Previously, § 103(a)(1) stated that the

principal for whom an incorporator acted could

sign filings with the Secretary of State if the in-

corporator was “not available by reason of

death, incapacity, unknown address, or refusal

or neglect to act” (emphasis added). The em-

phasized language has now been removed by the

amendment. However, that language should

remain significant insofar as it aids interpreta-

tion of “not available”—a phrase that most read-

ers would not normally take to encompass a re-

fusal or neglect to act by someone who

physically is available. Importantly, the legisla-

tive synopsis indicates that this amendment is

not intended to narrow the meaning of “not

available”; rather, its purpose is just the oppo-

site, i.e., “to remove any limitation on the reason

for the incorporator’s unavailability.” Del. H.B.

329 syn. § 1, 147th Gen. Assem. (2014).

Refinement of the Second-Step Merger

Provisions Added to the DGCL in 2013

Last year, the Delaware legislature amended the

DGCL’s basic merger statute, 8 Del. C. § 251, to

simplify the consummation of a merger when it

forms the second step of a standard two-step

acquisition of a public corporation (in which a

merger follows a successful tender offer for the

target corporation’s shares). Under then-new

§ 251(h), if various requirements were met, the

acquiring corporation would be spared the ne-

cessity of obtaining approval of the merger from

the target corporation’s stockholders if, follow-

ing the tender offer, the acquiring corporation

owned enough shares to determine the outcome

of any stockholder vote on the merger (typically,

anything over 50% of the shares entitled to

vote). This was a significant innovation be-

cause, under prior law, approval by the target’s

stockholders could be avoided only if the ac-

quirer held at least 90% of the target’s voting

shares after the tender offer and any subsequent

“top-up” purchases.

For a fuller discussion of the original version

of § 251(h), see the summer 2013 issue of the

Update, which is available at

http://www.youngconaway.com//files//upload

/DETransUpdateSummer2013.pdf.

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Delaware Transactional & Corporate Law Update

The streamlined transaction structure offered by

§ 251(h) was quickly put to use by M&A practi-

tioners. Their experience in crafting merger

agreements so as to come within the new provi-

sions led to a number of amendments that have

made § 251(h) clearer and more practical.

First, the agreement of merger need no longer

provide that the merger “shall” be governed by

§ 251(h) and “shall” be effectuated as soon as

possible after the tender offer. Instead, the

agreement need only “permit[]” the merger to be

effectuated under § 251(h) and provide that its

effectuation will follow the tender offer as soon

as possible if the merger is under § 251(h). Sec-

ond, the amendments have made clear that the

tender offer, which must be for “any and all” of

the target’s outstanding voting shares, neverthe-

less need not include target shares already held

by the acquirer, by any person that directly or

indirectly owns all of the stock in the acquirer,

or by any direct or indirect wholly owned sub-

sidiary of such person, of the target, or of the

acquirer.

Third, following the tender offer, the acquirer

need no longer “own[]” sufficient target shares

to control the outcome of a merger vote. In-

stead, the acquirer can reach the required thresh-

old by including shares “irrevocably accepted”

in the offer and “received” by the target’s depos-

itory before the offer expired. Fourth, the

amendments have removed the former require-

ment that no party to the agreement of merger be

an “interested stockholder” under Delaware’s

anti-takeover statute (8 Del. C. § 203). Finally,

the amendments have added definitions that

helpfully specify what § 251(h) means by “con-

summation” of a tender offer and stock “re-

ceived” by a “depository.”

The 2014 amendments to § 251(h) apply only

to agreements of merger entered into on or

after August 1, 2014.

Changing Corporation’s Name Without

Stockholder Vote; Other Amendments

The 2014 amendments to the DGCL have also

made it possible for a corporation to change its

name without stockholder approval. Changing a

corporation’s name requires an amendment to its

certificate of incorporation. Previously, the ap-

provals needed for such an amendment (as set

forth in § 242) were the same as for any other

amendment to a certificate of incorporation: if

the corporation had received payment for stock,

the amendment had to be approved by the board

and by holders of a majority of the outstanding

shares entitled to vote. As a result of the 2014

amendments, however, stockholder approval is

no longer needed to amend a certificate of in-

corporation to change the corporation’s name.

In addition, § 242 has been amended to permit

the removal of obsolete provisions from a certif-

icate of incorporation without a stockholder vote

and without restating the entire certificate.

Since 1967, § 245 of the DGCL has set forth a

procedure by which a certificate of incorporation

can be “restated”—i.e., “integrat[ing] into a sin-

gle instrument all of the provisions . . . which are

then in effect and operative” as a result of earlier

certificates of amendment or other filings with

the Delaware Secretary of State. 8 Del. C.

§ 245(a). If the corporation merely restates its

certificate without simultaneously further

amending it, no stockholder approval has been

required. 8 Del. C. § 245(b). Moreover, no

stockholder approval has been required if the

restated certificate also “omit[s]” certain obso-

lete provisions, including provisions naming the

incorporator and provisions effectuating a recap-

italization that has since taken place. 8 Del. C.

§ 245(c). Not until now, however, could such

obsolete provisions be removed, without a

stockholder vote, by means of a certificate of

amendment. The 2014 amendments to § 242

now permit a certificate of incorporation to be

amended, without a stockholder vote, to remove

the types of obsolete provisions described in

§ 245.

Rodney Square, 1000 North King Street  Wilmington, Delaware 19801  302-571-6600

www.YoungConaway.com  September 10, 2014

Delaware Transactional & Corporate Law Update

A third amendment this year to § 242 involves

the notice that must be given to stockholders

when an amendment to the certificate of incor-

poration requires their approval. Under § 242,

the notice to stockholders must set forth in full

or summarize the proposed amendment. 8 Del.

C. § 242(b)(1). The 2014 amendments have in-

serted a qualification to this notice requirement,

under which the notice need not set forth or

summarize the proposed amendment if “such

notice constitutes a notice of internet availability

of proxy materials under the rules promulgated

under the Securities Exchange Act of 1934.” Id.

Finally, the provisions of the DGCL regarding

stockholder voting trusts have been amended to

provide an additional means by which the set-

tlors of a voting trust can cause the corporation

to issue stock to the voting trustee. Previously,

the voting trust agreement had to be “filed” in

the corporation’s registered office in Delaware.

Now it will be sufficient if the agreement is “de-

livered” to either the corporation’s registered

office in Delaware or its principal place of busi-

ness. 8 Del. C. § 218.

About the Delaware Transactional & Corporate Law Update

The Delaware Transactional & Corporate Law

Update is published by the Business Planning

and Transactions Section of Young Conaway

Stargatt & Taylor, LLP. Young Conaway, based

in Wilmington, Delaware, is among the State’s

largest law firms, with over 100 attorneys in 10

practice sections, including bankruptcy, corpo-

rate, intellectual property, employment, tax, and

real estate practices.

The Business Planning and Transactions Section

handles matters arising at every stage in the

formation, growth, and development of corpora-

tions, limited liability companies, limited part-

nerships, statutory trusts, and other types of enti-

ties, including those formed as special purpose

entities in securitization and other structured

transactions. The section’s attorneys combine

experience in Delaware corporate law,

alternative-entity law, tax, commercial transac-

tions, and bankruptcy reorganizations.

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The views expressed in the Update are those of

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Members of the Business Planning and Transactions Section

Craig D. Grear, Partner.

[email protected]

302-571-6612

James P. Hughes, Jr., Partner.

[email protected]

302-571-6670

John J. Paschetto, Partner.

[email protected]m

302-571-6608

Norman M. Powell, Partner.

[email protected]

302-571-6629

Evangelos (“Andy”)

Kostoulas, Associate.

[email protected]m

302-576-3589