Delaware General Corporation Law – Subchapter II

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§ 121. | § 122. | § 123. | § 124. | § 125. | § 126. | § 127.

Corporations

CHAPTER 1. GENERAL CORPORATION LAW

Subchapter II. Powers

§ 121. General powers.

(a) In addition to the powers enumerated
in § 122 of this title, every corporation, its officers, directors and
stockholders shall possess and may exercise all the powers and
privileges granted by this chapter or by any other law or by its
certificate of incorporation, together with any powers incidental
thereto, so far as such powers and privileges are necessary or
convenient to the conduct, promotion or attainment of the business or
purposes set forth in its certificate of incorporation.

(b) Every corporation shall be governed
by the provisions and be subject to the restrictions and liabilities
contained in this chapter. (8 Del. C. 1953, § 121; 56 Del. Laws, c. 50.)

§ 122. Specific powers.

Every corporation created under this chapter shall have power to:

(1) Have perpetual succession by its
corporate name, unless a limited period of duration is stated in its
certificate of incorporation;

(2) Sue and be sued in all courts and
participate, as a party or otherwise, in any judicial, administrative,
arbitrative or other proceeding, in its corporate name;

(3) Have a corporate seal, which may be
altered at pleasure, and use the same by causing it or a facsimile
thereof, to be impressed or affixed or in any other manner reproduced;

(4) Purchase, receive, take by grant,
gift, devise, bequest or otherwise, lease, or otherwise acquire, own,
hold, improve, employ, use and otherwise deal in and with real or
personal property, or any interest therein, wherever situated, and to
sell, convey, lease, exchange, transfer or otherwise dispose of, or
mortgage or pledge, all or any of its property and assets, or any
interest therein, wherever situated;

(5) Appoint such officers and agents as
the business of the corporation requires and to pay or otherwise
provide for them suitable compensation;

(6) Adopt, amend and repeal bylaws;

(7) Wind up and dissolve itself in the manner provided in this chapter;

(8) Conduct its business, carry on its operations and have offices and exercise its powers within or without this State;

(9) Make donations for the public welfare
or for charitable, scientific or educational purposes, and in time of
war or other national emergency in aid thereof;

(10) Be an incorporator, promoter or manager of other corporations of any type or kind;

(11) Participate with others in any
corporation, partnership, limited partnership, joint venture or other
association of any kind, or in any transaction, undertaking or
arrangement which the participating corporation would have power to
conduct by itself, whether or not such participation involves sharing
or delegation of control with or to others;

(12) Transact any lawful business which the corporation’s board of directors shall find to be in aid of governmental authority;

(13) Make contracts, including contracts
of guaranty and suretyship, incur liabilities, borrow money at such
rates of interest as the corporation may determine, issue its notes,
bonds and other obligations, and secure any of its obligations by
mortgage, pledge or other encumbrance of all or any of its property,
franchises and income, and make contracts of guaranty and suretyship
which are necessary or convenient to the conduct, promotion or
attainment of the business of (a) a corporation all of the outstanding
stock of which is owned, directly or indirectly, by the contracting
corporation, or (b) a corporation which owns, directly or indirectly,
all of the outstanding stock of the contracting corporation, or (c) a
corporation all of the outstanding stock of which is owned, directly or
indirectly, by a corporation which owns, directly or indirectly, all of
the outstanding stock of the contracting corporation, which contracts
of guaranty and suretyship shall be deemed to be necessary or
convenient to the conduct, promotion or attainment of the business of
the contracting corporation, and make other contracts of guaranty and
suretyship which are necessary or convenient to the conduct, promotion
or attainment of the business of the contracting corporation;

(14) Lend money for its corporate
purposes, invest and reinvest its funds, and take, hold and deal with
real and personal property as security for the payment of funds so
loaned or invested;

(15) Pay pensions and establish and carry
out pension, profit sharing, stock option, stock purchase, stock bonus,
retirement, benefit, incentive and compensation plans, trusts and
provisions for any or all of its directors, officers and employees, and
for any or all of the directors, officers and employees of its
subsidiaries;

(16) Provide insurance for its benefit on
the life of any of its directors, officers or employees, or on the life
of any stockholder for the purpose of acquiring at such stockholder’s
death shares of its stock owned by such stockholder.

(17) Renounce, in its certificate of
incorporation or by action of its board of directors, any interest or
expectancy of the corporation in, or in being offered an opportunity to
participate in, specified business opportunities or specified classes
or categories of business opportunities that are presented to the
corporation or 1 or more of its officers, directors or stockholders. (8
Del. C. 1953, § 122; 56 Del. Laws, c. 50; 57 Del. Laws, c. 148, § 3; 64
Del. Laws, c. 112, § 3; 65 Del. Laws, c. 127, § 2; 71 Del. Laws, c.
339, § 7; 72 Del. Laws, c. 343, § 3.)

§ 123. Powers respecting securities of other corporations or entities.

Any corporation organized under the laws
of this State may guarantee, purchase, take, receive, subscribe for or
otherwise acquire; own, hold, use or otherwise employ; sell, lease,
exchange, transfer or otherwise dispose of; mortgage, lend, pledge or
otherwise deal in and with, bonds and other obligations of, or shares
or other securities or interests in, or issued by, any other domestic
or foreign corporation, partnership, association or individual, or by
any government or agency or instrumentality thereof. A corporation
while owner of any such securities may exercise all the rights, powers
and privileges of ownership, including the right to vote. (8 Del. C.
1953, § 123; 56 Del. Laws, c. 50.)

§ 124. Effect of lack of corporate capacity or power; ultra vires.

No act of a corporation and no conveyance
or transfer of real or personal property to or by a corporation shall
be invalid by reason of the fact that the corporation was without
capacity or power to do such act or to make or receive such conveyance
or transfer, but such lack of capacity or power may be asserted:

(1) In a proceeding by a stockholder
against the corporation to enjoin the doing of any act or acts or the
transfer of real or personal property by or to the corporation. If the
unauthorized acts or transfer sought to be enjoined are being, or are
to be, performed or made pursuant to any contract to which the
corporation is a party, the court may, if all of the parties to the
contract are parties to the proceeding and if it deems the same to be
equitable, set aside and enjoin the performance of such contract, and
in so doing may allow to the corporation or to the other parties to the
contract, as the case may be, such compensation as may be equitable for
the loss or damage sustained by any of them which may result from the
action of the court in setting aside and enjoining the performance of
such contract, but anticipated profits to be derived from the
performance of the contract shall not be awarded by the court as a loss
or damage sustained;

(2) In a proceeding by the corporation,
whether acting directly or through a receiver, trustee or other legal
representative, or through stockholders in a representative suit,
against an incumbent or former officer or director of the corporation,
for loss or damage due to such incumbent or former officer’s or
director’s unauthorized act;

(3) In a proceeding by the Attorney
General to dissolve the corporation, or to enjoin the corporation from
the transaction of unauthorized business. (8 Del. C. 1953, § 124; 56
Del. Laws, c. 50; 71 Del. Laws, c. 339, § 8.)

§ 125. Conferring academic or honorary degrees.

No corporation organized after April 18,
1945, shall have power to confer academic or honorary degrees unless
the certificate of incorporation or an amendment thereof shall so
provide and unless the certificate of incorporation or an amendment
thereof prior to its being filed in the office of the Secretary of
State shall have endorsed thereon the approval of the Department of
Education of this State. No corporation organized before April 18,
1945, any provision in its certificate of incorporation to the contrary
notwithstanding, shall possess the power aforesaid without first filing
in the office of the Secretary of State a certificate of amendment so
providing, the filing of which certificate of amendment in the office
of the Secretary of State shall be subject to prior approval of the
Department of Education, evidenced as hereinabove provided. Approval
shall be granted only when it appears to the reasonable satisfaction of
the Department of Education that the corporation is engaged in
conducting a bona fide institution of higher learning, giving
instructions in arts and letters, science or the professions, or that
the corporation proposes, in good faith, to engage in that field and
has or will have the resources, including personnel, requisite for the
conduct of an institution of higher learning. Upon dissolution, all
such corporations shall comply with § 8530 of Title 14. Notwithstanding
any provision herein to the contrary, no corporation shall have the
power to conduct a private business or trade school unless the
certificate of incorporation or an amendment thereof, prior to its
being filed in the office of the Secretary of State, shall have
endorsed thereon the approval of the Department of Education pursuant
to Chapter 85 of Title 14.

Notwithstanding the foregoing provisions,
any corporation conducting a law school, which has its principal place
of operation in Delaware, and which intends to meet the standards of
approval of the American Bar Association, may, after it has been in
actual operation for not less than 1 year, retain at its own expense a
dean or dean emeritus of a law school fully approved by the American
Bar Association to make an on-site inspection and report concerning the
progress of the corporation toward meeting the standards for approval
by the American Bar Association. Such dean or dean emeritus shall be
chosen by the Attorney General from a panel of 3 deans whose names are
presented to the Attorney General as being willing to serve. One such
dean on this panel shall be nominated by the trustees of said law
school corporation; another dean shall be nominated by a committee of
the Student Bar Association of said law school; and the other dean
shall be nominated by a committee of lawyers who are parents of
students attending such law school. If any of the above-named groups
cannot find a dean, it may substitute 2 full professors of accredited
law schools for the dean it is entitled to nominate, and in such a case
if the Attorney General chooses 1 of such professors, such professor
shall serve the function of a dean as herein prescribed. If the dean so
retained shall report in writing that, in such dean’s professional
judgment, the corporation is attempting, in good faith, to comply with
the standards for approval of the American Bar Association and is
making reasonable progress toward meeting such standards, the
corporation may file a copy of the report with the Secretary of
Education and with the Attorney General. Any corporation which complies
with these provisions by filing such report shall be deemed to have
temporary approval from the State and shall be entitled to amend its
certificate of incorporation to authorize the granting of standard
academic law degrees. Thereafter, until the law school operated by the
corporation is approved by the American Bar Association, the
corporation shall file once during each academic year a new report, in
the same manner as the first report. If, at any time, the corporation
fails to file such a report, or if the dean retained to render such
report states that, in such dean’s opinion, the corporation is not
continuing to make reasonable progress toward accreditation, the
Attorney General, at the request of the Secretary of Education, may
file a complaint in the Court of Chancery to suspend said temporary
approval and degree-granting power until a further report is filed by a
dean or dean emeritus of an accredited law school that the school has
resumed its progress towards meeting the standards for approval. Upon
approval of the law school by the American Bar Association, temporary
approval shall become final, and shall no longer be subject to
suspension or vacation under this section. (8 Del. C. 1953, § 125; 56
Del. Laws, c. 50; 59 Del. Laws, c. 207, § 1; 59 Del. Laws, c. 377, § 1;
65 Del. Laws, c. 103, § 2; 71 Del. Laws, c. 339, § 9; 72 Del. Laws, c.
433, § 1; 73 Del. Laws, c. 65, § 7; 74 Del. Laws, c. 249, § 1.)

§ 126. Banking power denied.

(a) No corporation organized under this
chapter shall possess the power of issuing bills, notes, or other
evidences of debt for circulation as money, or the power of carrying on
the business of receiving deposits of money.

(b) Corporations organized under this
chapter to buy, sell and otherwise deal in notes, open accounts and
other similar evidences of debt, or to loan money and to take notes,
open accounts and other similar evidences of debt as collateral
security therefor, shall not be deemed to be engaging in the business
of banking. (8 Del. C. 1953, § 126; 56 Del. Laws, c. 50; 57 Del. Laws,
c. 148, § 4.)

§ 127. Private foundation; powers and duties.

A corporation of this State which is a
private foundation under the United States internal revenue laws and
whose certificate of incorporation does not expressly provide that this
section shall not apply to it is required to act or to refrain from
acting so as not to subject itself to the taxes imposed by 26 U.S.C. §
4941 (relating to taxes on self-dealing), 4942 (relating to taxes on
failure to distribute income), 4943 (relating to taxes on excess
business holdings), 4944 (relating to taxes on investments which
jeopardize charitable purpose), or 4945 (relating to taxable
expenditures), or corresponding provisions of any subsequent United
States internal revenue law. (8 Del. C. 1953, § 127; 58 Del. Laws, c.
87.)

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