Furthermore, boards of directors of Delaware corporations subject to SEC reporting obligations that seek to change the date and time of currently noticed in-person stockholder meetings may adjourn a stockholder meeting to another date and time so long as the meeting will be held remotely. Boards of directors seeking to change the date and time of currently scheduled meetings will satisfy the notice requirement by: (i) filing a notice of the new date, time, and means of remote communication with the SEC; and (ii) posting a press release of the notice on the corporation’s website. However, the Tenth Modification leaves unchanged the notice requirements for meetings that are currently scheduled to be held in-person and would be rescheduled for a different in-person meeting.

The Tenth Modification will help keep boards of directors in compliance with Delaware’s notice requirements for stockholders’ meetings and also help protect meeting attendees from contracting the COVID-19 virus by promoting social distancing in connection with stockholder meetings.

Proposed amendments to the DGCL

The Tenth Modification was issued shortly after Delaware’s General Assembly was asked to consider emergency amendments to the Delaware General Corporation Law, which governs all Delaware corporations, to provide further relief to Delaware corporations beyond the relief accomplished through the Tenth Modification. The emergency amendments to the DGCL are currently under expedited consideration.

Specifically, the General Assembly is considering amendments to Section 110 of the DGCL to address the authority of boards of directors to (i) adopt emergency bylaws, (ii) postpone and/or relocate meetings of stockholders, and (iii) take certain actions with respect to declared but unpaid dividends during a national emergency. Importantly, any action taken under the proposed amendments to Section 110 to postpone stockholder meetings, relocate stockholder meetings, and/or delay distribution of declared but unpaid dividends could be taken “irrespective of whether a quorum of the board of directors or a standing committee thereof can be readily convened,” so long as (i) a majority of the directors present vote in favor of such action and (ii) notice is provided to the stockholders.

The proposed amendments to Section 110 of the DGCL, if passed by the General Assembly and signed by the governor, would be effective with respect to any emergency condition occurring on or after Jan. 1, 2020, and any action contemplated by Sections 110(a) and (i) taken by or on behalf of the corporation with respect to a meeting of stockholders or a dividend as to which the record date or payment date is anticipated to occur during the pendency of such condition. These proposed amendments to Section 110 would cease to be effective on Aug. 1, 2021, unless subsequently enacted into law on or before that date.

Proposed amendment to Section 110(a)

Currently, Section 110(a) of the DGCL authorizes Delaware corporations to “adopt emergency bylaws … during the existence of any catastrophe … or other similar emergency condition,” but it does not address what constitutes a “catastrophe” or “similar emergency condition.” Under the proposed amendments, subsection (a) to Section 110 would clarify the types of events that constitute an “emergency condition” sufficient to warrant adoption of emergency bylaws (deletions are shown by strike-through and insertions are show by underline):

(a) The board of directors of any corporation may adopt emergency bylaws, subject to repeal or change by action of the stockholders, which, shall notwithstanding any different provision elsewhere in this chapter or in Chapters 3 [repealed] and 5 [repealed] of Title 26, or in Chapter 7 of Title 5, or in the certificate of incorporation or bylaws, shall be operative during any emergency resulting from an attack on the United States or on a locality in which the corporation conducts its business or customarily holds meetings of its board of directors or its stockholders, or during any nuclear or atomic disaster, or during the existence of any catastrophe, or other similar emergency condition, including, but not limited to, an epidemic or pandemic, and a declaration of a national emergency by the United States government, as a result of which irrespective of whether a quorum of the board of directors or a standing committee thereof cannot can readily be convened for action. The emergency bylaws contemplated by this section may be adopted by the board of directors or, if a quorum cannot be readily convened for a meeting, by a majority of the directors present. The emergency bylaws may make any provision that may be practical and necessary for the circumstances of the emergency ….

Proposed amendment to add subsection (i) to Section 110

Section 110 of the DGCL would also be amended to add a new subsection—specifically, subsection (i)—to effect two additional changes. First, under the proposed Section 110(i), directors of Delaware corporations would be permitted, during an “emergency condition” such as the COVID-19 pandemic, to take action in connection with shareholder meetings, including postponing and/or changing the location of shareholder meetings, so long as the directors determine that action “to be practical and necessary to address the circumstances of such emergency condition.” Since the proposed amendments were drafted prior to the governor signing the Tenth Modification, it is unclear whether the General Assembly will seek to codify the additional notice requirement that a corporation post the new meeting details on its website as is required in the Tenth Modification discussed above.

Second, with respect to any dividend that has been declared as to which the record date has not occurred, Section 110(i) as proposed would authorize directors of Delaware corporations to change the record date and payment date to a later date or dates, provided (i) the record date currently in effect has not yet passed, (ii) the later dates are not greater than 180 days after each of the record date and payment date theretofore in effect, and (iii) the payment date as changed is not more than 60 days after the record date as changed. Any action taken under the proposed Section 110(i) could be taken “irrespective of whether a quorum of the board of directors or a standing committee thereof can be readily convened,” so long as (i) a majority of the directors present votes in favor of such action and (ii) notice is provided to the stockholders:

During any emergency condition contemplated by paragraph (a) of this section, irrespective of whether a quorum of the board of directors or a standing committee thereof can be readily convened, the board of directors (or, if a quorum cannot be readily convened for a meeting, a majority of the directors present) may (i) take any action that it determines to be practical and necessary to address the circumstances of such emergency condition with respect to a meeting of stockholders of the corporation notwithstanding anything to the contrary in this chapter or in Chapter 7 of Title 5 or in the certificate of incorporation or bylaws, including, but not limited to, (1) to postpone any such meeting to a later time or date (with the record date for determining the stockholders entitled to notice of, and to vote at, such meeting applying to the postponed meeting irrespective of § 213 of this title), and (2) with respect to a corporation subject to the reporting requirements of § 13(a) or § 15(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, to notify stockholders of any postponement or a change of the place of the meeting (or a change to hold the meeting solely by means of remote communication) solely by a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to § 13, § 14 or § 15(d) of such Act and such rules and regulations; and (ii) with respect to any dividend that has been declared as to which the record date has not occurred, change each of the record date and payment date to a later date or dates (in each case for a period of not greater than 180 days after each of the record date and payment date theretofore in effect and provided the payment date as so changed is not more than 60 days after the record date as so changed); provided that, in either case, the corporation gives notice of such change to stockholders as promptly as practicable thereafter (and in any event before the record date theretofore in effect), which notice, in the case of a corporation subject to the reporting requirements of § 13(a) or § 15(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, may be given solely by a document publicly filed with the Securities and Exchange Commission pursuant to § 13, § 14 or § 15(d) of such Act and such rules and regulations. No person shall be liable, and no meeting of stockholders shall be postponed or voided, for the failure to make a stocklist available pursuant to § 219 of this title if it was not practicable to allow inspection during any such emergency condition (emphasis added).

Key Takeaways

• Boards of directors seeking to change the location of currently noticed stockholder meetings from in-person to a remote location will satisfy the notice requirement by filing a notice with the SEC and posting a press release on the corporation’s website of the new remote location.
• Boards of directors seeking to change the date and time of an in-person meeting to a remote meeting will satisfy Delaware’s notice requirement by filing a notice of the new date, time, and means of remote communication with the SEC and posting a press release on the corporation’s website. If, however, the new meeting would still be held in-person, the Tenth Modification does not change the notice requirements for stockholder meetings.
• The Delaware General Assembly is considering emergency modifications to Section 110 of the DGCL that, if enacted, would:

1. Clarify that “emergency bylaws” may be enacted during an epidemic, pandemic, and/or declaration of national emergency by the U.S. government, when they are “practical and necessary for the circumstances of the emergency”.
2. Afford Delaware corporations the authority to postpone stockholder meetings to a later time/date and change the location of the stockholder meeting, as long as the corporation provides notice to its stockholders. However, it is unclear whether the additional requirement in the Tenth Modification—that a corporation post the new meeting details on its website—will be included in the proposed amendments.
3. Provide Delaware corporations with the authority to delay the record and payment date with respect to any dividend that has been declared but is not issued so long as (i) the record date has not occurred, (ii) the extended date is not greater than 180 days after each of the record date and payment date(s) currently in effect, (iii) the payment date as changed is not more than 60 days after the record date as changed, and (iv) the corporation gives notice to stockholders about the delay of dividend payment as promptly as practicable thereafter (and in any event before the record date in effect prior to the delay). Under certain circumstances, the corporation would be permitted to notify stockholders of postponement of dividend payments solely by filing a document publicly with the SEC.

• The proposed-COVID-19 amendments to Section 110 of the DGCL would be effective with respect to any emergency condition occurring on or after Jan. 1, 2020, and cease to be effective on Aug. 1, 2021, unless subsequently enacted into law on or before that date.