Proposed Merger Changes Introduced Into Del. Legislature

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By Michael Greene

May 6 — Draft legislation proposed by the Delaware State Bar Association's Corporation Law Section was introduced May 5 into the state's General Assembly.

The proposed legislation, primarily sponsored by Representative Melanie George Smith (D-Bear/Newark), includes changes to Delaware's General Corporation Law (HB 371), Revised Uniform Partnership Act (HB 368), Revised Uniform Limited Partnership Act (HB 367), and Limited Liability Company Act (HB 372 ).

The draft legislation was approved by the Delaware bar earlier this month (71 CARE, 4/13/16).

The proposed DGCL changes would modify Section 251(h)—the preferred mechanism for consummating two-step mergers under Delaware law—to permit the transfer of shares in a merger to be deemed tendered when determining whether the statutory minimum tender condition is satisfied.

Other proposals would amend DGCL Section 262 to dispense with certain minor stock-appraisal claims and allow parties to make payments to appraisal claimants to prevent further accrual of interest. The appraisal amendments largely mirror proposed modifications approved by the section last year that were never introduced into the state's Legislature (13 CARE 582, 3/20/15).

Under Delaware's appraisal statute, investors that choose not to participate in a merger can petition the chancery court for an appraisal of how much their shares are worth.

Observers previously told Bloomberg BNA that the proposed amendments are largely technical clarifications (53 CARE, 3/18/16).

All four bills are scheduled to be taken up by Delaware's House Judiciary Committee May 11.

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com

For More Information

The proposed amendments to the General Corporation Law are available at http://legis.delaware.gov/LIS/lis148.nsf/vwLegislation/HB+371/$file/legis.html?open.

The proposed amendments to the Revised Uniform Partnership Act are available at http://legis.delaware.gov/LIS/lis148.nsf/vwLegislation/HB+368/$file/legis.html?open .

The proposed amendment to the Revised Uniform Limited Partnership Act are available at http://legis.delaware.gov/LIS/lis148.nsf/vwLegislation/HB+367/$file/legis.html?open.

The proposed amendments to the Limited Liability Company Act are available at http://legis.delaware.gov/LIS/lis148.nsf/vwLegislation/HB+372/$file/legis.html?open.