Important Changes to Delaware’s Business Entity Laws
September 3, 2014
The Delaware Legislature approved several substantial changes to the state’s General Corporation Law (“DGCL”) and alternative entity statutes during this year’s 147th General Assembly, most of which became effective on August 1, 2014.
The 2014 amendments to the DGCL remove limitations on the use of an agent by an unavailable incorporator; expressly permit directors’ and stockholders’ use of pre-position consents that will become effective at a later time under certain conditions; authorize a corporation to amend its certificate of incorporation without submitting the amendment for stockholder approval in some circumstances; and modify and clarify the streamlined back-end merger process that was introduced with the 2013 amendments.
Amendments to Delaware’s LLC and partnership statutes include, among other changes: permitting a person to use pre-position consents that will become effective at a later time under certain conditions; clarifying that partners and members may make a books-and-records demand either in person or by an attorney or other agent; amending requirements for maintaining and providing access to records; and providing additional mechanisms for revoking a dissolution. Furthermore, the Delaware Statutory Trust Act has been amended to provide that the defense of usury does not apply among beneficial owners and trustees of a statutory trust; specify trustee voting requirements and default voting requirements; permit pre-position consents for beneficial owners and trustees; simplify investment company address compliance; restrict the use of the word “bank” in the names of statutory trusts; and clarify the treatment of rights, securities and interests in merging, domesticating, transferring and converting statutory trusts.
“The 2014 updates to the DGCL and alternative entity statutes will ensure that corporations and alternative entities continue to enjoy maximum flexibility in ordering their affairs,” says Matt O’Toole, a partner at Potter, Anderson & Corroon LLP in Wilmington, Delaware, and a Senior Legal Advisor at CSC®Publishing.
Delaware Laws Governing Business Entities, Fall 2014
These important changes to Delaware’s business entity statutes are captured in the Fall 2014 Edition of CSC®Publishing’s Delaware Laws Governing Business Entities. The Fall 2014 Edition’s comprehensive scope includes up-to-date annotated statutes for corporations and alternative entities, as well as updates to the Chancery Court rules through August 2.
In addition to the statutory updates, the Fall 2014 Edition contains more than 130 new case annotations from Delaware state courts and from courts in other jurisdictions that apply Delaware business entity law.
There are five new full text cases focusing on the latest legal developments regarding fee-shifting provisions in corporate by-laws, demand futility and excuse, resignation of directors, stockholder requests for information, and status quo orders.
Volume 2 of the set features published and unpublished annotations from state and federal courts citing Delaware business entity law, as well as the full text of recent key Delaware business opinions.
Volume 2 also includes “Guidelines for Persons Litigating in the Court of Chancery,” a useful resource created by the Court to“ensure that all attorneys are aware of the expectations of the Court and to provide helpful guidance in practicing in our Court.” Suggestions include best practices for handling in-court hearings and litigating cases before the court, touching on such issues as the role of Delaware counsel, protocols for contacting chambers, scheduling, pleadings, motions, and trial procedures.
Features for Faster Research
The Fall 2014 Edition includes these useful features:
- A Table of Sections Affected provides a comprehensive list of legislative changes.
- A Table of New Annotations lists new Delaware business entity cases.
- Blackline Amendment Notes clearly show how the new legislation has changed the statutory law.
- Gray Bars in the text indicate new cases.
- A Table of Amounts Payable provides the information needed to calculate fees owed to the state.
- The Court of Chancery Guidelines provides a comprehensive set of best practice guidelines for managing cases in Delaware’s business court.
- A Companion CD-ROM contains more than 160 Delaware forms for incorporation/formation, qualification, mergers, dissolution, and name reservation for all entity types.
- A Forms Appendix lists forms and contact information for the Delaware Division of Corporations.
- Legislative Analyses prepared by Delaware business law experts provide valuable insight regarding changes to Delaware business laws.
Delaware Laws Governing Business Entities is available as a two-volume softbound set designed to fit in a briefcase or be carried into the courtroom. In addition, electronic versions of the books are now also available for the iPad, Kindle, and other tablets, as well as some smart phones and computers.