Key Updates to 2023 Delaware Business Entity Laws Take Effect, CSC explains

By Eric Geringswald | CSC

Delaware lawmakers added or amended more than 40 sections of the state’s business laws governing Delaware corporations and alternative entities during the latest legislative session. Changes went into effect on August 1, 2023.

Among the changes were amendments to the DGCL provision concerning certificates of incorporation that reduce the voting threshold necessary to approve certain types of stock splits and to increase or decrease a corporation’s authorized shares. The changes were intended to:

• Eliminate the need for publicly listed corporations to secure the default vote of stockholders for charter amendments concerning certain types of forward stock splits and associated increases in the authorized number of shares; and

• Reduce the minimum stockholder vote required to authorize a charter amendment increasing or decreasing the authorized number of shares of a class, or effecting a reverse split of the shares of a class, for publicly listed shares meeting certain requirements.

Other provisions of the DGCL that have been amended in 2023 include those concerning the sale and resale of treasury shares, delegation of authority for certain issuances, record date determinations, appraisal rights, conversions, domestications, transfers, and continuations, and the sale, lease or exchange of collateral assets.

State lawmakers also approved changes to laws governing other Delaware entities:

• Delaware Limited Liability Company Act (DLLC). Changes to the DLLC included amendments to provisions concerning the execution of certificates, the ability to amend or adopt limited liability company agreements in connection with a merger or consolidation, the revocation of termination or dissolution of protected or registered series, the revocability of subscriptions for limited liability company interests, and the circumstances under which a certificate of amendment of certificate of division is permitted or required to be filed.

• Delaware Revised Uniform Limited Partnership Act (DRULPA). Among the DRULPA provisions amended are those concerning the ability to amend or adopt partnership agreements in connection with a merger or consolidation, the revocation of termination or dissolution of a protected or registered series, the revocability of subscriptions for partnership interests, and the circumstances under which a certificate of amendment of certificate of division is permitted or required to be filed.

• Delaware Revised Uniform Partnership Act (DRUPA). Amendments to DRUPA include those concerning the ability to amend or adopt partnership agreements in connection with a merger or consolidation, the revocability of subscriptions for partnership interests, and the application of the Act’s annual report requirements to foreign limited liability partnerships.

• Delaware Uniform Commercial Code (Delaware UCC). Changes were made to the Delaware UCC to reflect the 2022 amendments to the UCC drafted by the Uniform Law Commission in partnership with the American Law Institute. The amendments address the changing economy and the application of emerging technologies (including controllable electronic records) used for consensual commercial transactions.[1]

This latest edition captures these and other changes. The book is updated through Act Chapter 147 of the 152^nd General Assembly, with more than 40 added or amended sections since the Spring edition. The Table of Sections Affected lists all legislative changes, and Blackline Amendment notes in the statutory content clearly indicate the changes made. The Rules of the Court of Chancery have also been updated through August 17, 2023.

More than 90 new case notes from Delaware courts and from courts in other jurisdictions applying Delaware business entity law added since the Spring edition. Six new full-text cases in Volume 2 focusing on the latest legal developments concerning inspection of records, fair dealing, the “Substantially-All Test,” the duty of loyalty, and sale of certificated stock have been included in Volume 2. A Table of New Annotations lists added cases, and gray bars in the body of the book indicate where they’ve been inserted.

Delaware Laws Governing Business Entities Annotated

CSC Publishing releases Delaware Laws Governing Business Entities Annotated—its flagship publication—twice a year to ensure practitioners are working with the most up-to-date statutory information and have access to the very latest case law. Unique features such as the legislative analysis in this Fall edition provide additional resources and valuable insight for legal professionals working with Delaware entities.

A comprehensive fee table provides up-to-date information for calculating annual franchise taxes and other related entity fees. Note that a number of filing fees have changed since the Spring 2023 edition. “Guidelines for Persons Litigating in the Court of Chancery” can be found in Volume 2.

The book also includes online access to more than 150 forms for incorporation/formation, qualification, mergers, dissolution, and name reservation for all business entity types in Delaware via the LexisNexis^® Bookstore download center. A listing of the forms and contact information for Delaware’s Division of Corporations can be found in the book’s appendix.

The Fall 2023 edition of Delaware Laws Governing Business Entities Annotated is available as a two-volume softbound book or as an eBook, compatible with dedicated eReader devices, computers, tablets and smartphones that use eReader software or applications. It’s also available on the LexisNexis^® Digital Library. 

Voss on Delaware Contract Law

Delaware contract law frequently governs the formation, interpretation, and enforcement of high-stakes commercial agreements throughout the United States; it also underpins the nation’s predominant corporation and business entities laws.

Citing more than 3,250 authorities spanning more than 100 years, Voss on Delaware Contract Law provides an unprecedented review of that immense body of law.

Transactional attorneys and litigators will benefit from easy access to thousands of thoughtfully selected and organized quotations of cases, statutes, and rules, as well as harder-to-find court orders and transcripts, covering subjects from contract interpretation to contract-related torts, remedies, and comparative law. To further streamline research, this resource contains an innovative “Contract Typology” section, which surveys authorities by type of contract, clause, and phrase, to help identify type-specific considerations and interpretations pertinent to contract drafting and dispute resolution.

Symonds & O’Toole on Delaware Limited Liability Companies, Second Edition

More Delaware limited liability companies are formed each year than any other Delaware business entity. Symonds & O’Toole on Delaware Limited Liability Companies—referred to in a Delaware Court of Chancery decision as “the leading Delaware LLC treatise”—offers workable solutions for even the most complex transactions and practical insight into case law interpreting the statute, to help practitioners provide the best possible representation and advice to clients looking to make the most of their Delaware LLCs.

Co-author Matthew J. O’Toole is a partner, and co-author Robert L. Symonds, Jr. is a retired partner, at Potter Anderson & Corroon LLP in Wilmington Delaware. Mr. Symonds is one of the original drafters of the Delaware Limited Liability Company Act. Mr. O’Toole is a past chair of the Delaware State Bar Association committee responsible for proposing amendments to that statute and to Delaware’s limited partnership and general partnership laws.

To learn more about Delaware Laws Governing Business Entities Annotated, Voss on Delaware Contract Law, and Symonds & O’Toole on Delaware Limited Liability Companies, call 1.800.533.1637 or visit us online at www.lexisnexis.com/csc.

[1] The bill amending the Delaware UCC was signed on August 18, 2023, after the Fall 2023 Edition of Delaware Laws Governing Business Entities had gone to print. A legislative summary of the changes is included in the Fall edition. Changes to the Delaware UCC will be captured in the Spring 2024 edition.