A proposed amendment to the Delaware statute of limitations for contract claims should go a long way toward eliminating uncertainty in parties’ attempts to extend limitations periods by written agreement or by entering into contracts under seal. Parties generally cannot extend (or waive) a statutory limitations periods by agreement, and the requisite formalities required to enter into contracts under seal can be easily botched due to a lack of guidance and inconsistent caselaw. The amendment would allow parties to extend the limitations period in writing to up to 20 years and would only apply to contracts involving at least $100,000.
DGCL Now Provides Mechanism to Ratify Certain Defective Corporate Acts
As of April 1st, the Delaware General Corporation Law contains a new § 204, which provides Delaware corporations with a statutory safe harbor procedure for ratifying acts or transactions (including stock issuances) that due to a “failure of authorization” would be void or voidable. A copy of the Synopsis and Bill are attached here.
This is an important addition to the DGCL, as it allows companies to “clean up” certain prior missteps in approving corporate events, and represents the General Assembly’s intent to overturn case law such as STARR Surgical Co. v. Waggoner, 588 A.2d 1130 (Del. 1990), which made it difficult to ratify or otherwise seek validation on equitable grounds acts that were taken but not in strict compliance with the DGCL or the company’s governing documents.
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A Minute About Minutes
Drafting minutes of meetings—particularly for meetings of boards of directors or special committees of boards—is an art rather than a science, and while there are certainly many ways to accurately record the proceedings, understanding the ways minutes might be used later is very important.
In the world of Delaware corporate law, minutes of board meetings often play a pivotal role in shareholder litigation challenging the acts of the directors. Indeed, in a recent high-profile decision in which the Court of Chancery refused to enjoin the annual meeting for Sotheby’s in the face of a vigorous proxy fight, the Vice Chancellor’s opinion remarks upon the contents of board minutes on several occasions, and in a manner that provides some practical tips for consideration when drafting minutes. See, Third Point LLC v. Ruprecht, et al., C.A. Nos. 9469-VCP; 9497-VCP, Mem. Op. (Del. Ch. May 2, 2014).
“Fee-Shifting” Bylaws–A New Tool to Stem the Tide of Shareholder Litigation?
On May 8, 2014, the Delaware Supreme Court issued an en banc response to certified questions of law from the U.S. District Court for the District of Delaware, in which the Supreme Court held that a “fee shifting” bylaw provision in a non-stock corporation’s bylaws “can be valid and enforceable under Delaware law.” ATP Tour, Inc. v. Deutscher Tennis Bund (German Tennis Federation), et al., No. 534, 2013 (Del. May 8, 2014). The bylaw at issue would shift the company’s defense fees and costs to a member who had sued the company (or any other member) and was unsuccessful in “substantially achiev[ing], in substance and amount, the full remedy sought” in the litigation.
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DGCL Sec. 251(h) Makes “Two-Step” Mergers Easier to Complete
While not necessarily “breaking news” at this point, as of August 1, 2013, the Delaware General Corporation Law was amended to make two-step mergers—tender offers with back-end mergers—easier to complete. Pursuant to new § 251(h), third-party acquirors and targets may enter into merger agreements that specifically opt in to this statute and will allow the acquiror to complete the second-stage merger without a shareholder vote if the acquiror obtains a sufficient number of shares in the opening tender offer (usually more than 50%) that its vote alone would be sufficient to approve the merger.
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Welcome to the Duane Morris Delaware Business Law Blog
The lawyers of the Wilmington, DE, office of Duane Morris LLP are pleased to announce the launch of a new blog designed to highlight developments in all aspects of Delaware Business Law. Readers who follow the blog will receive timely reports on: (1) important new opinions from the Delaware Supreme Court, Delaware’s Court of Chancery, and the Complex Commercial Division of the Superior Court; (2) announcements and analysis of amendments to Delaware’s General Corporation Law and alternative-entity statutes; (3) important developments in IP law from the U.S. District Court for the District of Delaware; and (4) news from Delaware’s Bankruptcy Court.
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