Delaware General Corporation Law

News & Analysis as of

The Year in Social Enterprise: 2015 Legislative and Policy Review

The past year proved to be a landmark year in the brief history of the emerging social enterprise sector. Indeed, 2015 witnessed continued legislative efforts and important policy developments that illustrate the increased...more

Yahoo! Compensation Litigation – History May Not Repeat Itself but it Often Rhymes

The Delaware Court of Chancery has issued an opinion on a Section 220 demand made against Yahoo! No complaint has yet been filed, and although Vice Chancellor Laster speculates on some inferences that can be drawn, no one has...more

Court Of Chancery Explains Section 205 Jurisdiction

Under the fairly new provisions of Section 205 of the DGCL, the Court may validate certain “defective corporate acts,” including “any act or transaction purportedly taken by or on behalf of the corporation that is … within...more

Significant Developments in Corporate Governance and M&A Law in 2015

There were important developments in 2015 in Delaware law concerning issues of corporate governance and/or arising in the context of M&A transactions. These developments arose from a number of sources, including statutory...more

Delaware Insider: When Deciding Whether to Judicially Dissolve an LLC, the Court May Find the “Purpose” of the LLC to Be Different...

Pursuant to 6 Del. C. § 18-802, if a member or manager of a Delaware LLC petitions for a decree of dissolution, the Delaware Court of Chancery may dissolve the LLC “whenever it is not reasonably practicable to carry on the...more

Chancery Court Confirms that the Removal of Directors Serving on Unclassified Boards and Elected by Plurality Voting Cannot Be...

In In re VAALCO Energy, Inc. Consolidated Stockholder Litigation, C.A. No. 11775 VCL (Del. Ch. Dec. 21, 2015) (Transcript), the Delaware Court of Chancery confirmed that the certificate of incorporation or bylaws of a...more

Forum Shopping No More? Oregon Joins Delaware in Upholding Exclusive Forum Bylaw Provision

On December 10, 2015, the Oregon Supreme Court held that an exclusive forum bylaw provision adopted unilaterally by a Delaware company’s board was a valid and enforceable contractual forum selection clause.  Importantly, the...more

Court of Chancery Explains When a Stockholder’s Right to Remove Directors May Be Limited to “For Cause” Only Removals

Section 141(k) of the Delaware General Corporation Law (DGCL) contains the default rule that a corporation’s stockholders have the right to vote to remove directors from the board “with or without cause.” Section 141(k)...more

Pre-IPO Companies Cannot Protect Non-Classified Directors from Removal Without Cause

One of the fundamental issues that companies preparing for an IPO must consider is the type of corporate governance mechanisms to put in place after their IPO. Under Delaware law, public companies can have a classified board,...more

M&A Update: Delaware Chancery Court Invalidates Charter and Bylaw Provisions Allowing Only For Cause Removal of Directors Where...

In a December 21, 2015 transcript ruling, the Delaware Chancery Court invalidated the provisions of VAALCO Energy, Inc.’s charter and bylaws that allow for removal of directors only “for cause” even though VAALCO’s board is...more

But Everybody’s Doing It: Delaware Chancery Court Invalidates VAALCO’s “Wacky” Charter and Bylaws Provisions Despite Use by Other...

Ruling from the bench on dueling motions for summary judgment just days before a special meeting of shareholders was to be held, on December 21, 2015, Delaware Vice Chancellor J. Travis Laster invalidated certain provisions...more

Oregon Supreme Court Upholds Delaware Corporation’s “Exclusive-Forum” Bylaw

In Roberts v. TriQuint Semiconductor, Inc., 358 Or. 413, __ P.3d ___, 2015 WL 8539902 (Dec. 10, 2015), the Oregon Supreme Court unanimously held that a Delaware corporation’s “exclusive-forum” bylaw, which required that all...more

The Most Important Principles of Delaware Corporate Law Can’t Be Found In the DGCL

I have often observed that you can read every section of the Delaware General Corporation Law and learn almost nothing about Delaware corporate law.  Here are three of the most fundamental principles of Delaware corporate law...more

Delaware Addresses Exclusive Representations, Integration and Exclusive Remedies Provisions

In Prairie Capital III, L.P. v. Double E Holding Corp. the Delaware Court of Chancery examined exclusive representations and integration clauses, omissions and exclusive remedies provisions. The opinion notes...more

Goldman Sachs May Still Be Liable After Board's Fiduciary Duty Breach Exculpated

Section 102(b)(7) of the Delaware General Corporation Law permits a provision in a company's certificate of incorporation that exculpates directors from monetary liability for breaches of the fiduciary duty of care. By...more

Merger Price Is Best Evidence of Fair Value in Appraisal Action

The practice of a hedge fund buying shares in a Delaware corporation upon the announcement of a cash-out merger to then exercise appraisal rights, sometimes referred to as “appraisal arbitrage,” has generated controversy....more

Compliance with the Formal Approval Requirements of Delaware Law Required for Stockholder Ratification of Director Compensation

On October 28th, the Delaware Chancery Court, in Espinoza v. Zuckerberg, et al., held that stockholder ratification of a transaction that was approved by an interested board of directors must be accomplished formally through...more

Court Of Chancery Holds Section 205 Is Limited To Validating Action

In a case of first impression, the Court holds that Section 205 of the DGCL can only be used to validate defective corporate actions, not to declare an action invalid. While a similar claim might be made in a Section 225...more

Court Of Chancery Reverses Director Resignation

In this unusual case, the Court of Chancery has reinstated a director who was tricked into resigning. The opinion has a good discussion of how directors may resign and when their resignation is not effective....more

Chancellor Bouchard Rules There Can Be No Ratification Without Works

In reading Chancellor Andre G. Bouchard’s ruling yesterday in Espinoza v. Zuckerberg, 2015 Del. Ch. LEXIS 273 (Del. Ch. 2015), I was reminded of the theological debate among Christians concerning justification by faith.  The...more

Insights: The Delaware Edition - October 2015

We are pleased to share with you the inaugural issue of Insights: The Delaware Edition, a periodic publication addressing significant Delaware deal litigation and corporation law developments. In This Issue: - Q&A...more

"Delaware Supreme Court Reaffirms Important Protections for Corporate Directors"

A trio of opinions from the Delaware Supreme Court, each authored by Chief Justice Leo E. Strine, Jr., has reaffirmed Delaware’s deference to the business judgment of disinterested corporate decision-makers and restored...more

"Recent Amendments to the Delaware General Corporation Law Address Fee-Shifting and Forum Selection Provisions"

It has become almost axiomatic that when a public company merger is announced, stockholder litigation quickly follows. In recent years, some studies have indicated that more than 90 percent of transactions valued at more than...more

What's Market? Update: Delaware Corporate and M&A

Fee Shifting and Forum Selection Clauses - Much attention has been paid to Delaware legislative developments regarding fee shifting and forum selection clauses. On June 24, 2015, Delaware Governor Jack Markell signed...more

What's Market? Update: Maryland REIT

For many years, it was assumed and accepted that Delaware corporate law was more advantageous to corporations than the corporate law of other states. While Delaware case law regarding corporations is still more developed...more

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