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Financial Services Law Insights and Observations

Delaware Amends Delaware General Corporation Law

State Issues

On April 10, Delaware Governor Jack Markell signed HB 19, a bill amending the Delaware General Corporation Law. In addition to technical amendments, the amendments authorize, but do not require (i) corporate bylaws to include stockholder nominees to the board in the corporation’s proxy solicitation materials; this provision also authorizes certain stockholder preconditions to such access (e.g., a minimum level of stock ownership), (ii) the corporation to reimburse stockholder expenses incurred in soliciting proxies for the election of directors, subject to conditions that may also be imposed by the bylaws, (iii) separate record dates for determining stockholders entitled to notice of and to vote at a meeting. The bill further (i) clarifies that, when the record date for determining stockholders entitled to vote is set less then ten days before the date of the meeting, the list of stockholders must reflect those stockholders as of the tenth day before the meeting date, (ii) prohibits the corporation from retroactively eliminating advancement or indemnification rights provided by a charter or bylaw provision, and (iii) grants the Delaware Court of Chancery subject matter jurisdiction, in limited circumstances, to remove a director convicted of a felony or found by judgment to have committed a breach of loyalty to the corporation if the director did not act in good faith and if judicial removal is necessary to avoid irreparable harm to the corporation. The bill becomes effective August 1, 2009.