Delaware General Corporation Law

The Council of Institutional Investors (CII), an investor advocacy association primarily for pension funds and local governments, has put forth a proposal to amend the Delaware General Corporation Law to limit the ability of publicly-traded Delaware corporations to maintain multi-class common stock voting structures (i.e., high-vote/low-vote stock structures).
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On August 1, a number of amendments to the Delaware General Corporation Law (DGCL) went into effect. Notably, several of the amendments modified sections of the DGCL pertaining to (1) two-step mergers effected under Section 251(h) of the DGCL, and (2) appraisal rights and proceedings.

Section 251(h) Mergers

DGCL Section 251(h) provides a mechanism for a buyer to effectuate the negotiated acquisition of a Delaware-domiciled publicly-traded corporation by a tender offer to purchase at least a majority of outstanding shares of the target, followed by a short-form merger to acquire any shares not tendered in such offer. This back-end merger does not require stockholder approval, thereby saving the buyer the time and expense involved in preparing and filing a proxy statement and holding a stockholders’ meeting if Delaware’s standard short-form merger threshold (90%) is not satisfied. The 2016 amendments to the DGCL clarified certain Section 251(h) requirements and increased the availability of such short-form mergers to potential buyers.
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