On July 16, 2020, the Delaware legislature amended the Delaware General Corporation Law (the “DGCL”) in part to respond to the COVID-19 pandemic, The full text of such amendments is available here.
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Section 110 of the DGCL was amended to include and clarify additional circumstances that will be viewed as “emergency” conditions under which the board of directors of a Delaware corporation is empowered to adopt emergency bylaws or exercise other emergency powers. Such additional emergency conditions now expressly include “an epidemic or pandemic, and a declaration of a national emergency by the U.S. government.” The amendments further provide that if a quorum for a board meeting cannot be convened during an emergency, a majority of the directors present at such meeting are authorized to adopt emergency bylaws.
Subject to special rules for publicly traded corporations, the amendment to Section 110 also allows the board of directors to (i) take any actions that it determines to be “practical and necessary” to address the emergency with respect to a stockholders’ meeting notwithstanding contrary provisions in the corporation’s certificate of incorporation or bylaws, including, among other things, changing the location (including via remote communications) of or postponing a stockholder meeting, and (ii) change the record date and payment date of a previously declared dividend so long as the record date has not yet occurred and the new payment date is no more than 60 days after the new record date, subject to special rules for publicly traded corporations. These amendments to Section 110 took effect retroactively as of January 1, 2020.
Other provisions of the DGCL have also been modified to facilitate stockholder meetings and notices via electronic means in the context of the COVID-19 pandemic. Section 228(d) of the DGCL was amended to allow stockholders to provide consent in lieu of a meeting by electronic means, unless doing so is prohibited or restricted by the corporation’s certificate of incorporation or bylaws. Section 232(b) of the DGCL was amended to allow corporations to give notice to stockholders by electronic mail without the stockholders’ prior consent. Such amended provisions became effective on July 16, 2020.