What does it mean to be a Delaware corp. - Often we cry what is happening no shareholder meeting and this and that is decided !!!
Here is a line of information on that issue:
--------------------------
Delaware General Corporation Law
The Delaware General Corporation Law reflects a philosophy that corporations may best flourish in an atmosphere of minimum regulation of internal corporate governance. A corporation's founders, directors and management are granted flexibility in structuring and managing the affairs of the corporation. A company may be formed to engage in virtually any lawful activity. Few requirements are imposed for the basic corporate documents, the articles of incorporation, and the by-laws. The articles of incorporation may include 'any provisions creating, defining, limiting and regulating the powers of the corporation, the directors and the stockholders ... if such provisions are not contrary to the laws of this State'. The bylaws may contain 'any provision, not inconsistent with the law or the articles of Incorporation, relating to the business of the corporation, the conduct of its affairs, and its rights or powers, or the rights or powers of its stockholders, directors, officers or employees'.
The directors of a Delaware corporation manage all of its business and affairs unless otherwise provided by the articles of Incorporation. The board possesses broad powers, including the power to adopt, amend or repeal the corporation's by-laws. Without first seeking stockholder approval, the board may, by resolution, specify the number of directors, the dividend rate, and issue authorised shares at such times and for such consideration as it deems appropriate. The board may also be empowered to specify convertibility, preferences, qualifications and other forms of classes of stock. There are no requirements for US citizens to be the incorporators of a Delaware corporation nor are there any restrictions as to the minimum or maximum number of shares that must be authorised or issued, the type of stock, or the rights of the stockholders.
The Delaware Corporation Law permits directors' meetings to be held over the telephone rather than requiring the directors to be present for a formal meeting.
Delaware law also allows the directors to be non-resident aliens, and there is no requirement that the directors need to be US citizens or resident in the US Neither does Delaware impose the requirement for independent audit of their accounts or require the minute book, stock transfer ledger, and other corporate books to be kept within the state of incorporation.
For administrative convenience, Delaware also allows the board to delegate certain aspects of the managerial function to committees consisting of one or more directors. Such committees may be authorised to exercise full powers of the formal board of directors, with certain exceptions, in matters of corporate responsibility. The boards of many large companies use the committee system to delegate review of such matters as adults or executive compensation. Generally, the board of directors appoint officers to operate the business on a day-day business. These officers are usually a President, Vice-President, Treasurer and Secretary. In Delaware a director can be an officer, and a sole director can be all of the above named officers.
Other specific provisions of the DGCL aimed at flexibility include the following:
* The board of directors may consist of only one director or, of course, more if the stockholders wish.
* The board may conduct meetings by telephone conference or take action by unanimous written consent without a meeting
* No minimum capital requirements are imposed
* The articles of incorporation may include a provision eliminating or limiting the personal liability of directors of monetary damages for certain breaches of fiduciary duty
* Written consent for actions to be taken by stockholders is allowed in lieu of a stockholders' meeting
* Corporations may purchase shares of their own stock and hold, sell or transfer those shares
* There is no limit to the amount of stock that may be held by the corporation, either inside or outside of the state
Delaware corporations also enjoy a favourable state tax policy. The State assesses moderate filing and organisational fees, as well as annual franchise taxes. More significantly, the Delaware State Constitution prohibits the state from imposing corporate income taxes on those corporations which do not conduct business in the State.
Efforts have been made in other states to copy the DGCL and, in fact, many of the statutory provisions discussed above are available in other states. Indeed, Nevada has adopted the DGCL outright, changing only its name. What other states have not successfully duplicated, however, and what remains perhaps the most significant factor distinguishing the Delaware corporate law is its expert judiciary, which has been called upon to interpret virtually every provision of the DGCL and has done so in a careful and consistent fashion. In a common law system, the existence of consistent reliable precedent is of great importance, and most litigants in corporate cases want sound, impartial and predictable results.
Unlike the judiciary of larger or more populous states with more crowded dockets, Delaware courts routinely provide prompt judicial resolution of corporate disputes. The courts permit expected treatment of many corporate cases and have developed a facility for dealing with complex corporate matters in a very short period of time.
-----------------------
Kr
Jens |
