Delaware – General Corporation Law

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§ 141. | § 142. | § 143. | § 144. | § 145. | § 146.

Corporations

CHAPTER 1. GENERAL CORPORATION LAW

Subchapter IV. Directors and Officers

§ 141. Board of directors;
powers; number, qualifications, terms and quorum; committees; classes
of directors; nonprofit corporations; reliance upon books; action
without meeting; removal.

(a) The business and affairs of every
corporation organized under this chapter shall be managed by or under
the direction of a board of directors, except as may be otherwise
provided in this chapter or in its certificate of incorporation. If any
such provision is made in the certificate of incorporation, the powers
and duties conferred or imposed upon the board of directors by this
chapter shall be exercised or performed to such extent and by such
person or persons as shall be provided in the certificate of
incorporation.

(b) The board of directors of a
corporation shall consist of 1 or more members, each of whom shall be a
natural person. The number of directors shall be fixed by, or in the
manner provided in, the bylaws, unless the certificate of incorporation
fixes the number of directors, in which case a change in the number of
directors shall be made only by amendment of the certificate. Directors
need not be stockholders unless so required by the certificate of
incorporation or the bylaws. The certificate of incorporation or bylaws
may prescribe other qualifications for directors. Each director shall
hold office until such director’s successor is elected and qualified or
until such director’s earlier resignation or removal. Any director may
resign at any time upon notice given in writing or by electronic
transmission to the corporation. A resignation is effective when the
resignation is delivered unless the resignation specifies a later
effective date or an effective date determined upon the happening of an
event or events. A resignation which is conditioned upon the director
failing to receive a specified vote for reelection as a director may
provide that it is irrevocable. A majority of the total number of
directors shall constitute a quorum for the transaction of business
unless the certificate of incorporation or the bylaws require a greater
number. Unless the certificate of incorporation provides otherwise, the
bylaws may provide that a number less than a majority shall constitute
a quorum which in no case shall be less than 1/3 of the total number of
directors except that when a board of 1 director is authorized under
this section, then 1 director shall constitute a quorum. The vote of
the majority of the directors present at a meeting at which a quorum is
present shall be the act of the board of directors unless the
certificate of incorporation or the bylaws shall require a vote of a
greater number.

(c)(1) All corporations incorporated
prior to July 1, 1996, shall be governed by paragraph (1) of this
subsection, provided that any such corporation may by a resolution
adopted by a majority of the whole board elect to be governed by
paragraph (2) of this subsection, in which case paragraph (1) of this
subsection shall not apply to such corporation. All corporations
incorporated on or after July 1, 1996, shall be governed by paragraph
(2) of this subsection. The board of directors may, by resolution
passed by a majority of the whole board, designate 1 or more
committees, each committee to consist of 1 or more of the directors of
the corporation. The board may designate 1 or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. The bylaws may
provide that in the absence or disqualification of a member of a
committee, the member or members present at any meeting and not
disqualified from voting, whether or not the member or members present
constitute a quorum, may unanimously appoint another member of the
board of directors to act at the meeting in the place of any such
absent or disqualified member. Any such committee, to the extent
provided in the resolution of the board of directors, or in the bylaws
of the corporation, shall have and may exercise all the powers and
authority of the board of directors in the management of the business
and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to
amending the certificate of incorporation (except that a committee may,
to the extent authorized in the resolution or resolutions providing for
the issuance of shares of stock adopted by the board of directors as
provided in subsection (a) of § 151 of this title, fix the designations
and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or
any other class or classes of stock of the corporation or fix the
number of shares of any series of stock or authorize the increase or
decrease of the shares of any series), adopting an agreement of merger
or consolidation under § 251, § 252, § 254, § 255, § 256, § 257, § 258,
§ 263 or § 264 of this title, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the
corporation’s property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or
amending the bylaws of the corporation; and, unless the resolution,
bylaws or certificate of incorporation expressly so provides, no such
committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock or to adopt a certificate of ownership
and merger pursuant to § 253 of this title.

(2) The board of directors may designate
1 or more committees, each committee to consist of 1 or more of the
directors of the corporation. The board may designate 1 or more
directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. The
bylaws may provide that in the absence or disqualification of a member
of a committee, the member or members present at any meeting and not
disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the
board of directors to act at the meeting in the place of any such
absent or disqualified member. Any such committee, to the extent
provided in the resolution of the board of directors, or in the bylaws
of the corporation, shall have and may exercise all the powers and
authority of the board of directors in the management of the business
and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to the
following matter: (i) approving or adopting, or recommending to the
stockholders, any action or matter (other than the election or removal
of directors) expressly required by this chapter to be submitted to
stockholders for approval or (ii) adopting, amending or repealing any
bylaw of the corporation.

(3) Unless otherwise provided in the
certificate of incorporation, the bylaws or the resolution of the board
of directors designating the committee, a committee may create 1 or
more subcommittees, each subcommittee to consist of 1 or more members
of the committee, and delegate to a subcommittee any or all of the
powers and authority of the committee.

(d) The directors of any corporation
organized under this chapter may, by the certificate of incorporation
or by an initial bylaw, or by a bylaw adopted by a vote of the
stockholders, be divided into 1, 2 or 3 classes; the term of office of
those of the first class to expire at the first annual meeting held
after such classification becomes effective; of the second class 1 year
thereafter; of the third class 2 years thereafter; and at each annual
election held after such classification becomes effective, directors
shall be chosen for a full term, as the case may be, to succeed those
whose terms expire. The certificate of incorporation or bylaw provision
dividing the directors into classes may authorize the board of
directors to assign members of the board already in office to such
classes at the time such classification becomes effective. The
certificate of incorporation may confer upon holders of any class or
series of stock the right to elect 1 or more directors who shall serve
for such term, and have such voting powers as shall be stated in the
certificate of incorporation. The terms of office and voting powers of
the directors elected separately by the holders of any class or series
of stock may be greater than or less than those of any other director
or class of directors. In addition, the certificate of incorporation
may confer upon 1 or more directors, whether or not elected separately
by the holders of any class or series of stock, voting powers greater
than or less than those of other directors. Any such provision
conferring greater or lesser voting power shall apply to voting in any
committee or subcommittee, unless otherwise provided in the certificate
of incorporation or bylaws. If the certificate of incorporation
provides that 1 or more directors shall have more or less than 1 vote
per director on any matter, every reference in this chapter to a
majority or other proportion of the directors shall refer to a majority
or other proportion of the votes of the directors.

(e) A member of the board of directors,
or a member of any committee designated by the board of directors,
shall, in the performance of such member’s duties, be fully protected
in relying in good faith upon the records of the corporation and upon
such information, opinions, reports or statements presented to the
corporation by any of the corporation’s officers or employees, or
committees of the board of directors, or by any other person as to
matters the member reasonably believes are within such other person’s
professional or expert competence and who has been selected with
reasonable care by or on behalf of the corporation.

(f) Unless otherwise restricted by the
certificate of incorporation or bylaws, any action required or
permitted to be taken at any meeting of the board of directors or of
any committee thereof may be taken without a meeting if all members of
the board or committee, as the case may be, consent thereto in writing,
or by electronic transmission and the writing or writings or electronic
transmission or transmissions are filed with the minutes of proceedings
of the board, or committee. Such filing shall be in paper form if the
minutes are maintained in paper form and shall be in electronic form if
the minutes are maintained in electronic form.

(g) Unless otherwise restricted by the
certificate of incorporation or bylaws, the board of directors of any
corporation organized under this chapter may hold its meetings, and
have an office or offices, outside of this State.

(h) Unless otherwise restricted by the
certificate of incorporation or bylaws, the board of directors shall
have the authority to fix the compensation of directors.

(i) Unless otherwise restricted by the
certificate of incorporation or bylaws, members of the board of
directors of any corporation, or any committee designated by the board,
may participate in a meeting of such board, or committee by means of
conference telephone or other communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this subsection shall constitute
presence in person at the meeting.

(j) The certificate of incorporation of
any corporation organized under this chapter which is not authorized to
issue capital stock may provide that less than 1/3 of the members of
the governing body may constitute a quorum thereof and may otherwise
provide that the business and affairs of the corporation shall be
managed in a manner different from that provided in this section.
Except as may be otherwise provided by the certificate of
incorporation, this section shall apply to such a corporation, and when
so applied, all references to the board of directors, to members
thereof, and to stockholders shall be deemed to refer to the governing
body of the corporation, the members thereof and the members of the
corporation, respectively.

(k) Any director or the entire board of
directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of
directors, except as follows:

(1) Unless the certificate of
incorporation otherwise provides, in the case of a corporation whose
board is classified as provided in subsection (d) of this section,
shareholders may effect such removal only for cause; or

(2) In the case of a corporation having
cumulative voting, if less than the entire board is to be removed, no
director may be removed without cause if the votes cast against such
director’s removal would be sufficient to elect such director if then
cumulatively voted at an election of the entire board of directors, or,
if there be classes of directors, at an election of the class of
directors of which such director is a part.

Whenever the holders of any class or
series are entitled to elect 1 or more directors by the certificate of
incorporation, this subsection shall apply, in respect to the removal
without cause of a director or directors so elected, to the vote of the
holders of the outstanding shares of that class or series and not to
the vote of the outstanding shares as a whole. (8 Del. C. 1953, § 141;
56 Del. Laws, c. 50; 56 Del. Laws, c. 186, § 3; 57 Del. Laws, c. 148,
§§ 5, 6; 57 Del. Laws, c. 421, § 1; 59 Del. Laws, c. 437, §§ 2-5; 64
Del. Laws, c. 112, § 6; 65 Del. Laws, c. 127, § 3; 66 Del. Laws, c.
136, §§ 2, 3; 70 Del. Laws, c. 79, § 7; 70 Del. Laws, c. 186, § 1; 70
Del. Laws, c. 349, § 2; 71 Del. Laws, c. 339, §§ 11-13; 72 Del. Laws,
c. 343, §§ 4-6; 73 Del. Laws, c. 298, § 2; 74 Del. Laws, c. 84, § 2; 74
Del. Laws, c. 326, § 2; 75 Del. Laws, c. 30, § 1; 75 Del. Laws, c. 306,
§§ 3, 4; 76 Del. Laws, c. 145, § 1.)

§ 142. Officers; titles, duties, selection, term; failure to elect; vacancies.

(a) Every corporation organized under
this chapter shall have such officers with such titles and duties as
shall be stated in the bylaws or in a resolution of the board of
directors which is not inconsistent with the bylaws and as may be
necessary to enable it to sign instruments and stock certificates which
comply with §§ 103(a)(2) and 158 of this title. One of the officers
shall have the duty to record the proceedings of the meetings of the
stockholders and directors in a book to be kept for that purpose. Any
number of offices may be held by the same person unless the certificate
of incorporation or bylaws otherwise provide.

(b) Officers shall be chosen in such
manner and shall hold their offices for such terms as are prescribed by
the bylaws or determined by the board of directors or other governing
body. Each officer shall hold office until such officer’s successor is
elected and qualified or until such officer’s earlier resignation or
removal. Any officer may resign at any time upon written notice to the
corporation.

(c) The corporation may secure the fidelity of any or all of its officers or agents by bond or otherwise.

(d) A failure to elect officers shall not dissolve or otherwise affect the corporation.

(e) Any vacancy occurring in any office
of the corporation by death, resignation, removal or otherwise, shall
be filled as the bylaws provide. In the absence of such provision, the
vacancy shall be filled by the board of directors or other governing
body. (8 Del. C. 1953, § 142; 56 Del. Laws, c. 50; 56 Del. Laws, c.
186, § 4; 57 Del. Laws, c. 649, § 2; 59 Del. Laws, c. 437, § 6; 71 Del.
Laws, c. 339, § 14.)

§ 143. Loans to employees and officers; guaranty of obligations of employees and officers.

Any corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other
employee of the corporation or of its subsidiary, including any officer
or employee who is a director of the corporation or its subsidiary,
whenever, in the judgment of the directors, such loan, guaranty or
assistance may reasonably be expected to benefit the corporation. The
loan, guaranty or other assistance may be with or without interest, and
may be unsecured, or secured in such manner as the board of directors
shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be
deemed to deny, limit or restrict the powers of guaranty or warranty of
any corporation at common law or under any statute. (8 Del. C. 1953, §
143; 56 Del. Laws, c. 50.)

§ 144. Interested directors; quorum.

(a) No contract or transaction between a
corporation and 1 or more of its directors or officers, or between a
corporation and any other corporation, partnership, association, or
other organization in which 1 or more of its directors or officers, are
directors or officers, or have a financial interest, shall be void or
voidable solely for this reason, or solely because the director or
officer is present at or participates in the meeting of the board or
committee which authorizes the contract or transaction, or solely
because any such director’s or officer’s votes are counted for such
purpose, if:

(1) The material facts as to the
director’s or officer’s relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or
the committee, and the board or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be
less than a quorum; or

(2) The material facts as to the
director’s or officer’s relationship or interest and as to the contract
or transaction are disclosed or are known to the shareholders entitled
to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the shareholders; or

(3) The contract or transaction is fair
as to the corporation as of the time it is authorized, approved or
ratified, by the board of directors, a committee or the shareholders.

(b) Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the
board of directors or of a committee which authorizes the contract or
transaction. (8 Del. C. 1953, § 144; 56 Del. Laws, c. 50; 56 Del. Laws,
c. 186, § 5; 57 Del. Laws, c. 148, § 7; 71 Del. Laws, c. 339, §§ 15-17.)

§ 145. Indemnification of officers, directors, employees and agents; insurance.

(a) A corporation shall have power to
indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason
of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys’ fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the
person in connection with such action, suit or proceeding if the person
acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable
cause to believe the person’s conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the person did not act in
good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that the person’s conduct was unlawful.

(b) A corporation shall have power to
indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by
reason of the fact that the person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys’ fees) actually and
reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and
in a manner the person reasonably believed to be in or not opposed to
the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.

(c) To the extent that a present or
former director or officer of a corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding
referred to in subsections (a) and (b) of this section, or in defense
of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys’ fees) actually and reasonably
incurred by such person in connection therewith.

(d) Any indemnification under subsections
(a) and (b) of this section (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a
determination that indemnification of the present or former director,
officer, employee or agent is proper in the circumstances because the
person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be
made, with respect to a person who is a director or officer at the time
of such determination, (1) by a majority vote of the directors who are
not parties to such action, suit or proceeding, even though less than a
quorum, or (2) by a committee of such directors designated by majority
vote of such directors, even though less than a quorum, or (3) if there
are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (4) by the stockholders.

(e) Expenses (including attorneys’ fees)
incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid
by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including
attorneys’ fees) incurred by former directors and officers or other
employees and agents may be so paid upon such terms and conditions, if
any, as the corporation deems appropriate.

(f) The indemnification and advancement
of expenses provided by, or granted pursuant to, the other subsections
of this section shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be
entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such
person’s official capacity and as to action in another capacity while
holding such office.

(g) A corporation shall have power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out
of such person’s status as such, whether or not the corporation would
have the power to indemnify such person against such liability under
this section.

(h) For purposes of this section,
references to “the corporation” shall include, in addition to the
resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger
which, if its separate existence had continued, would have had power
and authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer, employee
or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this
section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its
separate existence had continued.

(i) For purposes of this section,
references to “other enterprises” shall include employee benefit plans;
references to “fines” shall include any excise taxes assessed on a
person with respect to any employee benefit plan; and references to
“serving at the request of the corporation” shall include any service
as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and
in a manner such person reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner “not opposed to the best interests of
the corporation” as referred to in this section.

(j) The indemnification and advancement
of expenses provided by, or granted pursuant to, this section shall,
unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators
of such a person.

(k) The Court of Chancery is hereby
vested with exclusive jurisdiction to hear and determine all actions
for advancement of expenses or indemnification brought under this
section or under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise. The Court of Chancery may
summarily determine a corporation’s obligation to advance expenses
(including attorneys’ fees). (8 Del. C. 1953, § 145; 56 Del. Laws, c.
50; 56 Del. Laws, c. 186, § 6; 57 Del. Laws, c. 421, § 2; 59 Del. Laws,
c. 437, § 7; 63 Del. Laws, c. 25, § 1; 64 Del. Laws, c. 112, § 7; 65
Del. Laws, c. 289, §§ 3-6; 67 Del. Laws, c. 376, § 3; 69 Del. Laws, c.
261, §§ 1, 2; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 120, §§ 3-11.)

§ 146. Submission of matters for stockholder vote.

A corporation may agree to submit a
matter to a vote of its stockholders whether or not the board of
directors determines at any time subsequent to approving such matter
that such matter is no longer advisable and recommends that the
stockholders reject or vote against the matter. (74 Del. Laws, c. 84, §
3.)

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