Skadden Discusses Proposed 2022 Amendments to Delaware Corporation Law

On April 12, 2022, the Corporation Law Section of the Delaware State Bar Association (DSBA) approved proposed amendments to the Delaware General Corporation Law (DGCL) that include provisions that, if enacted, would authorize exculpation clauses limiting or eliminating the monetary liability of certain officers, make appraisal rights available to beneficial owners of stock and facilitate domestications of non-U.S. entities and consummations of other corporate transactions related to domestications.

Exculpation of Senior Officers

Since its adoption in 1986, Section 102(b)(7) has authorized a corporation’s certificate of incorporation to contain an exculpation clause that limits or eliminates the personal liability of its … Read more

Skadden Discusses Delaware Law Authorizing Captive Insurance for D&O Coverage

On February 7, 2022, Delaware’s governor signed a bill amending the Delaware General Corporation Law (DGCL) to expressly authorize Delaware corporations to purchase and maintain directors’ and officers’ (D&O) liability insurance by or through captive insurance companies. This amendment, described further below, permits coverage for liabilities incurred by a corporation’s directors, officers, employees and agents, even in certain situations where the corporation would not be permitted to indemnify for such liability.

Background

When directors and officers face claims in their capacity or status as such, their defense costs generally will be indemnified or advanced by the corporation. However, there are … Read more