Synopsis
This Act continues the practice of amending periodically the Delaware General Corporation Law (“DGCL”) to keep it current and maintain its national preeminence. The following is a section-by-section review of the proposed amendments to the DGCL. Sections 1, 3 and 4 of this Act amend §§ 102(f), 109(b) and 115 of Title 8, respectively. Since 2015, the provisions of §§ 102(f), 109(b) and 115 have included provisions for the regulation of “internal corporate claims” as defined in § 115. In addition to permitting forum selection provisions that require internal corporate claims to be adjudicated in a court in this State, these sections prohibit certificate of incorporation and bylaw provisions that purport to: a. impose “fee-shifting” against stockholders with respect to internal corporate claims; or b. preclude a stockholder from asserting an internal corporate claim in a court in this State. A certificate of incorporation may address and regulate not only internal corporate claims but additional claims that relate to a corporation’s “intra-corporate affairs” if the certificate provision at issue is consistent with public policy. Salzberg v. Sciabacucchi, 227 A.3d 102 (Del. 2020). Sections 1, 3 and 4 of this Act amend §§ 102(f), 109(b) and 115 so that the same statutory safeguards that apply to certificate and bylaw provisions regulating internal corporate claims will also apply to certificate and bylaw provisions addressing the intra-corporate affairs claims permitted under the reasoning of the Salzberg decision. With respect to these claims: a. Amended §§ 102(f) and 109(b) prohibit fee-shifting provisions: that is, certificate of incorporation and bylaw provisions that purport to impose liability on a stockholder for the attorneys’ fees or expenses of the corporation or any other party with respect to any claim that a stockholder has brought, in its capacity as a stockholder or in the right of the corporation, in an action, suit, or proceeding. b. Amended § 115 specifies that a certificate of incorporation or bylaw provision addressing intra-corporate affairs claims must be consistent with applicable jurisdictional requirements and must allow stockholders to bring the claims in at least 1 court in this State that has jurisdiction over such claims. Amended § 115 permits the designation of any judicial or arbitral forum so long as the designation does not prevent a stockholder from bringing claims in a court with jurisdiction in this State. The United States District Court for the District of Delaware is a court “in” this State for purposes of amended § 115. Rather than specifically defining the types of non-internal claims that constitute intra-corporate affairs claims, amended § 115 authorizes forum selection provisions that relate to “the business of the corporation, the conduct of its affairs, or the rights or powers of the corporation or its stockholders, directors or officers.” This language is taken from §§ 102(b)(1) and 109(b). The Salzberg decision relied on similar language from § 102(b)(1) to uphold the validity of forum selection provisions related to certain intra-corporate affairs claims. It is anticipated that the courts will interpret and apply amended § 115 in the same manner that the Delaware Supreme Court interpreted and applied the language of § 102(b)(1) in the Salzberg decision. Amended § 115 is not intended to promote the development of new forum selection provisions beyond what is permitted under the reasoning of the Salzberg decision. Under amended § 115, a forum selection provision addressing non-internal corporate claims cannot prohibit claims from being brought in a court in this State “that has jurisdiction over such claims.” Amended § 115 therefore reaches a result different from the United States Court of Appeals for the Ninth Circuit in Lee v. Fisher, 70 F.4th 1129 (9th Cir. 2023), and the United States District Court for the Western District of Texas in Sobel v. Thomp