Delaware Amends General Corporation Law to Address Issues Related to Majority Voting for Recent amendments (the "Delaware Amendments") to the Delaware General Corporation Law (the "DGCL"), which take effect on August 1, 2006, address questions related to voting standards for director elections in a limited fashion. The Delaware Amendments do not require corporations to take any action nor do they dictate a required voting standard.
Summary of Changes
The Delaware Amendments add a new sentence to DGCL Section 141(b) that provides that a director’s resignation is effective (1) when delivered, (2) at a later specified effective date or (3) upon the happening of an event or events (i.e. failure to receive a specified vote), and that a resignation which is conditioned upon the failure to receive a specified vote for reelection may provide that it is irrevocable. Prior to the adoption of this provision, the enforceability of a resignation conditioned on a future event was unclear, particularly if a director asserted that fiduciary duties required the director to refuse to resign. The Delaware Amendments also add a new sentence to DGCL Section 216 that provides: "a bylaw amendment adopted by the stockholders which specifies the votes that shall be necessary for the election of directors may not be repealed or amended by the board of directors." This change is significant because generally a corporation’s bylaws can be amended by the board of directors or the stockholders
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