Delaware Legislature Proposes Amendments Allowing Escrowing of Director and Stockholder Consents 05/08/2014Posted by Morse, Barnes-Brown Pendleton in M&A.
Tags: board of directors, delaware court, DGCL, escrow, M&A transactions, stockholder
By: Scott Bleier
In response to the practical concerns raised by AGR Halifax Fund, Inc. v. Fiscina (743 A.2d 1188 (Del. Ch. 1999)), new legislation has recently been proposed that would amend Section 141(f) of the General Corporation Law of the State of Delaware (“DGCL“) to clarify that an individual, whether or not then a director, may consent to Board action at a future time (including upon the occurrence of an event) no later than 60 days after the consent is given. If enacted, the proposed amendment would become effective on August 1, 2014 and would allow a soon-to-be-appointed director to consent to a future action of the Board and place the consent in escrow, such consent to become effective upon the closing of a transaction (provided that the closing does not occur more than 60 days after the consent was provided and placed in escrow).
Please see our full blog post to learn the concerns brought about by Halifax and what this may mean for your merger/acquisition transaction.