On April 1, 2014, new provisions of the Delaware General Corporation Law (the DGCL) went into effect, Sections 204 and 205 of the DGCL.
Section 204 of the DGCL provides corporations with the ability to ratify certain corporate actions that would otherwise have been void or voidable because of their failure to comply with statutory law or the corporation's organizational documents. Prior to the adoption of Section 204, Delaware case law had held that such corporate actions could not be subsequently ratified. The new statute provides instructions regarding the following: (i) the content of the initial board resolution; (ii) whether stockholder approval is necessary; (iii) which stockholders must be notified of the action; (iv) the form and content of stockholder notice; and (v) the form and content of public filings necessary after the resolution has been approved.
Section 205 of the DGCL vests the Court of Chancery with exclusive jurisdiction over any action brought in respect of such defective corporate acts. Section 205 provides the Court of Chancery with broad powers to fashion declaratory and other appropriate remedies, and specifies considerations to be weighed by the Court of Chancery in fashioning these remedies.
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