New Legislation regarding the Delaware General Corporation Law and Delaware Limited Liability Company Act

If you are part of the Delaware corporate machine, you’ll want to be on top of some new legislation that has just been passed.

Click on the bill to view or print a PDF version:

• Senate Bill 322
(an act to amend Title 8 of the Delaware Code relating to the General Corporation Law)
Status: Signed by Governor on 6/27/06

Notable changes regarding Directors and Shareholders that are to take effect August 1st, 2006

– Section 4 Amends the first sentence of § 141(d) to clarify that the classified terms of directors commence after the classification of the board of directors becomes effective, thereby expressly permitting certificate of incorporation or bylaw provisions that provide for classification effective at a point in time after such provisions are adopted. The new sentence added to Section 141(d) permits the certificate of incorporation or bylaw provision that divides the directors into classes to include language authorizing the board of directors to assign members of the board already in office to the board classes at the time such classification becomes effective.

– Section 5 Amends § 216 to provide that a bylaw adopted by a vote of stockholders that prescribes the required vote for the election of directors may not be altered or repealed by the board of directors. This amendment does not address any other situation in which the board of directors amends a bylaw adopted by stockholder vote.

Notable changes regarding Delaware Registered Agents that are to take effect January 1st, 2007

-Sections 9 and 10 Amend § 132 to expand the types of entities that may serve as registered agents; prescribe the duties of a registered agent; require that persons or entities serving as registered agent for more than 50 business entities be generally open during normal business hours and have a natural person present to operate such office and communicate with the Secretary of State on request; require Delaware corporations to provide registered agents with a designated natural person to receive communications from the registered agent and require the registered agent to maintain in its records the identity of such persons; authorize the Secretary of State to issue regulations to enforce these provisions; authorize the Secretary of State to bring a lawsuit in the Court of Chancery to enjoin from acting as a registered agent, or as an officer, or director, or managing agent of a registered agent, any person or entity who fails to comply with the statutory requirements, who has been convicted of a felony or any crime involving dishonesty, fraud or moral turpitude, or who has used the office of registered agent in a manner intended to defraud the public; and authorize the Secretary of State to make a list of registered agents available to the public.

Notable changes regarding Delaware Annual Franchise Reports that are to take effect January 1st, 2008

– Sections 18 through 26 Amend §§ 502, 503, 510, 511, 514, and 517 to require Delaware corporations to file a complete annual franchise tax report including, among other things, the names and addresses of all of the corporation’s directors as of the filing date of the report and the name and address of the officer who signs the report, and require the Secretary of State to declare void the charter of any corporation that fails to file a complete annual franchise tax report.

• House Bill 414
(an act to amend Chapter 18, Title 6 of the Delaware Code relating to the creation, regulation, operation and dissolution of domestic limited liability companies and the registration and regulation of foreign limited liability companies)
Status: Signed by Governor on 6/28/06

Notable changes regarding meetings of Members and Managers that are to take effect August 1st, 2006

– Section 33. This Section amends § 18-302(d) of the Act to clarify that meetings of members of a Delaware limited liability company may be held by conference telephone or similar communications equipment unless otherwise provided in a limited liability company agreement.

-Section 34. This Section amends § 18-404(d) of the Act to clarify that meetings of managers of a Delaware limited liability company may be held by conference telephone or similar communications equipment unless otherwise provided in a limited liability company agreement.

Notable changes regarding Delaware Registered Agents that are to take effect January 1st, 2007

– Sections 2 and 3. These Sections amend § 18-104 of the Act to expand the types of entities that may serve as registered agents; prescribe the duties of a registered agent; require that persons or entities serving as registered agent for more than fifty entities (a “Commercial Registered Agent”) be generally open during normal business hours and have a natural person present to operate such office and communicate with the Secretary of State on request; require Delaware limited liability companies to provide registered agents with a designated natural person to receive communications from the registered agent and require the registered agent to maintain in its records the identity of such persons; authorize the Secretary of State to issue regulations to enforce these provisions; authorize the Secretary of State to bring a lawsuit in the Court of Chancery to enjoin any person or entity from acting as a registered agent, or as an officer, or director or managing agent of a registered agent, any person or entity who fails to comply with the statutory requirements, who has been convicted of a felony or any crime involving dishonesty, fraud or moral turpitude, or who has used the office of registered agent in a manner intended to defraud the public; provide that the certificate of formation or registration of a domestic or foreign limited liability company will be cancelled if it fails, within a prescribed period, to obtain and designate a new registered agent if the Court of Chancery enjoins any person or entity from acting as a registered agent for such limited liability company; and authorize the Secretary of State to make a list of registered agents available to the public.

NOTE: THE FOLLOWING SUMMARY OF 2006 LEGISLATION AFFECTING DELAWARE BUSINESS ENTITY LAWS IS NEITHER AUTHORITATIVE NOR ALL-INCLUSIVE. THIS SUMMARY DOES NOT REPRESENT OFFICIAL POLICY OF THE STATE OF DELAWARE AND HAS BEEN PREPARED ONLY FOR GENERAL INFORMATION PURPOSES AND NOT FOR LEGAL ADVICE.

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