Delaware General Corporation Law (DGCL)
The primary statute governing corporations incorporated in Delaware — the dominant jurisdiction for U.S. corporate law. Codified at Del. Code Ann. tit. 8.
Key Sections
Formation and Charter
- § 101 — Incorporators; how corporation formed
- § 102 — Contents of certificate of incorporation (charter); par value; authorized shares; limitation of director liability (exculpation clause)
- § 109 — Bylaws; who may adopt, amend, repeal
- § 122 — Specific powers; general corporate powers
Board of Directors
- § 141 — Board of directors; powers; classification of board; quorum; committees
- § 142 — Officers; duties; selection; resignation; removal; vacancies
- § 144 — Interested directors and officers — transaction not void solely because director has financial interest if: (a) disinterested director approval, (b) shareholder approval, or (c) transaction fair to corporation
- § 145 — Indemnification; advancement of expenses; insurance
Shares and Capital
- § 151–157 — Issuance of stock, preferred stock, rights and options
- § 160 — Treasury shares; acquisition; restrictions
- § 162 — Liability of stockholder or subscriber for stock
- § 174 — Liability of directors for unlawful payment of dividends
Dividends and Distributions
- § 170 — Dividends; payment; wasting asset corporations
- § 174 — Director liability for unlawful dividends
Mergers and Acquisitions
- § 251 — Merger or consolidation of domestic corporations (long-form merger; requires board approval + majority shareholder vote)
- § 253 — Merger of parent corporation and subsidiary (short-form merger; 90% ownership threshold; no target shareholder vote)
- § 259 — Powers, rights, privileges, immunities of surviving corporation
- § 262 — Appraisal rights — dissenting shareholders entitled to judicial determination of fair value
Amendments and Dissolution
- § 242 — Amendment of certificate of incorporation (requires board resolution + majority shareholder vote)
- § 271 — Sale, lease or exchange of assets; consideration; procedure
- § 275 — Dissolution; procedure
Derivative Suits
- § 327 — Stockholder’s derivative suits (demand requirement)
Books and Records
- § 220 — Inspection of books and records; stockholder’s right; enforcement; short swing profits
Philosophy
Delaware courts (particularly the Court of Chancery) interpret the DGCL through a contractarian lens: the corporate charter and bylaws are treated as contracts among shareholders, directors, and the corporation. The DGCL is largely enabling (permissive) rather than prescriptive — parties can customize many governance structures within the statutory framework.
Standard of Review
Delaware courts apply different standards of review depending on the context:
- Business Judgment Rule (BJR): presumption that directors acted in good faith, with due care and loyalty
- Enhanced Scrutiny (Revlon, Unocal): when board has conflict or acts defensively
- Entire Fairness: when controlling shareholder is on both sides of a transaction