Delaware Corporation Law Changes

Delaware recently amended its corporate laws to clarify fiduciary duties and stockholder inspection rights. These changes provide safe harbor procedures for transactions involving directors and controlling stockholders, ensuring greater predictability. Furthermore, the amendments define key terms related to these procedures, aiming to simplify compliance and enhance clarity for corporations and stockholders. We outline the significant changes here.

Amendments to Section 144

• Offers safe harbor procedures for directors and officers.

• Protects against claims of breach of fiduciary duty.

• Shields controlling stockholders from duty of care violations.

Safe Harbor for Transactions

• Requires disclosure of key facts.

• Needs approval from disinterested directors or stockholders.

• Ensures fairness to the corporation.

Going Private Transactions

• Involves actions affecting disinterested stockholders.

• Must get committee approval and be fair to stockholders.

Definitions

• Clarifies terms like “controlling stockholder” and “disinterested director.”

• Explains what a material interest and relationship mean.

Amendments to Section 220

• Details which books and records stockholders can inspect.

• Sets conditions for inspection requests.

• The Delaware Court can order extra records if needed.