MONTH-IN-BRIEF (Jul 2020)
Securities Regulation
Amendments to DGCL Signed into Law on July 16, 2020
By Sullivan & Cromwell
On July 16, 2020, Delaware’s Governor signed House Bill 341, amending key provisions of Delaware’s General Corporation Law (“DGCL”). Among other things, the amendments modify existing statutory provisions governing boards of directors’ power to adopt emergency bylaws, address other emergency board powers and effect changes to provisions enabling the indemnification of corporate officers.
Referencing the impacts of the COVID-19, amendments relating to DGCL Section 110 emergency powers took effect retroactively as of January 1, 2020 and include:
- Expanding the circumstances where a board of directors can implement emergency bylaws to include “an epidemic or pandemic, and a declaration of a national emergency by the United States government.” The revised statute no longer requires that the catastrophe prevent a quorum of the board from convening a meeting. Emergency bylaws may now be adopted by the normal voting procedures of the board or, if a quorum cannot be readily convened for a meeting, by a majority of the directors present.
- Providing a board of directors, under emergency conditions described in DGCL Section 110(a), with discretion to postpone or change the place of a stockholder meeting – including to hold the meeting solely by means of remote communication. Public companies may notify stockholders of such a change solely by a document that is publicly filed with the Securities and Exchange Commission.
- During emergency conditions described in DGCL Section 110(a), new DGCL Section 110(i)(2)(ii) permits a board of directors to delay the record date and payment date of a dividend payment for which the record date has not yet occurred without incurring liability to stockholders.
