Delaware Amends its General Corporation Law, Limited Liability Company and Limited Partnership Acts
On July 15, 2014, Delaware Governor Markell signed several bills into law which amends Delaware’s General Corporation Law (DGCL), Limited Liability Company Act, Revised Uniform Limited Partnership Act and Revised Uniform Partnership Act. Each bill is effective on August 1, 2014, except those DGCL amendments relating to merger agreements entered into on or after August 1, 2014. The amendments include:
Consent Revisions (141[f] and 228[c]). Any person may now execute a written consent to corporate action with a future effective time, provided that such person becomes a director or stockholder prior to the consent becoming effective. The consents may be executed so long as the effective future time (or a time determined upon the happening of an event) is no later than 60 days after such consent is executed. Persons who signed written action by the Board of Directors must be a director by the time the consent is effective and the consent may be revoked at any time prior to the effective date. The amendment to written action by stockholders does not affect the requirement that the consent bear the actual date of signature and, unlike the amendment to Section 141(f), does not expressly state that the person signing such consent need not be a stockholder when the consent is signed.
Amendment to Certificate of Incorporation (Section 242). Corporations are now permitted to make certain amendments to its Certificate of Incorporation without stockholder approval, including, (i) changing the corporate name or (ii) deleting provisions or the original certificate of incorporation which names the incorporator(s), the initial board of directors and the original subscribers for shares and (iii) such provisions contained in any amendment to the Certificate of Incorporation as were necessary to affect the change, exchange reclassification, subdivision, combination or cancellation of stock. Such amendments must be set forth (in-full or a brief summary) in notices of special or annual meetings, unless such notice constitutes a notice of internet availability of proxy materials under the rules promulgated under the Securities Exchange Act of 1934.
Merger or Consolidation of Domestic Corporations (Section 251[h]). In 2013, DGLC Section 251(h) was adopted to permit merger agreements to contain a provision eliminating the need for a stockholder vote for a second-step merger after the consummation of a tender or exchange offer (if certain conditions were met). The new provisions remove Section 4 of 251(h) which disallowed the use of 251(h) when a party to the merger agreement was an “interested stockholder” of such target; thereby removing any uncertainty regarding the permissibility of tender and support agreements and rollover agreements in a Section 251(h) transaction.
Additionally, the amendments clarify that the offer, which must be for “any and all of the outstanding stock” of the target, may exclude stock of the target that is owned at the commencement of the offer by (i) such target; (ii) the corporation making such offer; (iii) any person that owns directly or indirectly all of the outstanding stock of the corporation making such offer or (iv) any direct or indirect wholly-owned subsidiary of any of the foregoing. Shares owned by such persons need not be tendered into the offer or converted into the same consideration as shares accepted in the offer.
The amendments further provided that outstanding shares of each class or series of stock of the target that is the subject of and not irrevocably accepted for purchase or exchange in an offer is to be converted in such merger into, or into the right to receive, the same amount of cash, property, rights or securities to be paid for shares of such class of series of stock of the target irrevocably accepted for purchase in such offer.
Finally, the amendments clarify when an acquiror is deemed, for purposes of Section 251(h), to “own” the shares of stock acquired in the tender or exchange offer; thereby permitting it to consummate the merger in accordance with Section 251(h).
LLCs, LPs, Partnerships
Information to Communications Agent. Limited Liability Companies (LLCs) and Limited Partnerships (LPs) are now required to provide certain information to communications contacts, who receive communications from the company’s registered agent. Upon request, either written or by electronic transmission, of the LLC’s/LP’s communications contact, an LLC or LP must provide the name, business address and business telephone number of a natural person with access to the record that contains the name and address of each member and manager of the LLC or name and address of each partner of the LP required to be maintained.
Member/Limited Partner Consent. Unless otherwise stated in an LLC (Operating) Agreement or Partnership Agreement, a person (whether or not a member or limited partner) may consent to an action that will be effective at a future time (including a time determined upon the happening of an event), as long as such person is a member or limited partner of such entity as of the effective date of the consent. Unlike such amendments to the DGCL, there is no 60 day limitation. Similar amendments also apply to the consent of the Manager of an LLC, the General Partner of an LP, and the Partner in a partnership.
Request for Records. Each member of an LLC, limited partner of an LP, or partner of a partnership may request to view books and records in person or by an attorney or other agent. Attorney or other agents acting on behalf of such persons must be accompanied by a power of attorney or such other written authorization to act on such person’s behalf.
LLCs and LPs must also now maintain a current record that identifies the name and last known business, residence or mailing address of each member and manager.
Other. The LLC and LP statutes now provide for additional means by which a dissolution of an LLP or LP may be revoked.