MONTH-IN-BRIEF (Aug 2022)
2022 Amendments to the Delaware General Corporation Law
By Pamela L. Millard, Potter Anderson & Corroon LLP
The Governor of Delaware has signed into law amendments to the General Corporation Law of the State of Delaware (the “DGCL”) proposed by the Delaware State Bar Association and subsequently approved by the Delaware legislature. A number of provisions of the DGCL are affected, and the legislation addresses several significant topics, including the personal liability of senior corporate officers under Section 102(b)(7) of the DGCL, the authority to issue stock and options, the expansion of appraisal rights to beneficial owners, and new provisions intended to streamline the process for non-U.S. entities to domesticate into Delaware. The 2022 amendments to the DGCL took effect on August 1, 2022, and apply to corporate actions taken on or after that date.
Personal Liability of Senior Corporate Officers (Section 102(b)(7))
Section 102(b)(7) of the DGCL has been amended to extend exculpation rights for breaches of the fiduciary duty of care to senior officers of a Delaware corporation. The amendments address a long-standing discrepancy between exculpation rights granted to directors but not to corporate officers, an issue magnified in cases where a corporate officer also serves as a director and could therefore be protected from liability in his or her capacity as a director, but not with respect to any actions taken as an officer. The dichotomy has been troublesome since the Delaware Supreme Court held in Gantler v. Stephens, 2009 WL 188828 (Del. 2009) that both officers and directors owe fiduciary duties of care and loyalty to a corporation and its stockholders but that personal liability for breaches of the fiduciary duty of care differ for officers and directors given the statutory language contained in Section 102(b)(7).