Small Business Reading Room

Friday, March 14, 2003

Changes in Delaware Corporate Law

Changing Legislation and Policy at the Delaware Division of Corporations

House Bill 16 (HB 16), which will amend Sections 103, 391 and 9607 of the Delaware General Corporation Law, has been passed by both the House and the Senate and is awaiting the Governor's signature (see below for details).

Synopsis (from the Bill):

These Amendments clarify the general rule that the filing date of an instrument filed with the Secretary of State is the date and time of delivery of the instrument and the limited exceptions to this rule.

To further enhance service to Delaware corporations, the amendment to Section 391(h)(1) also enables the Secretary of State to offer a new "1-hour" expedited service to complement the Secretary of State's existing "2-hour" service offering.

Commentary (from Delaware Intercorp, Inc.):

There used to be a very cozy relationship between the filing agents like Delaware Intercorp, Inc., and the Secretary of State's office. We could routinely get errors fixed by pleading a good case for applying a prior date and time of filing. Most of the errors corrected, by the way, were the State's errors.

One of the agents, at the request of a client, abused this relationship and it came to light in Chancery Court. The court slapped the Secretary of State's office pretty hard in finding that they had not carried out the mission of the office when they allowed a prior filing date and time. This legislation takes away the Secretary's discretion in these matters and therefore makes errors, the State's, or ours much more difficult and in some cases impossible to correct.

The addition of a One Hour Service is a pure money grab. Prior to this proposal most Two Hour Service requests were processed within 15 minutes.

The effective date of the legislation will be sixty (60) days from the date it is signed into law

Read the text of HB 16 in PDF.

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Delaware Intercorp, Inc.
113 Barksdale Professional center
Newark, DE 19711-3258

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is Delaware and the best incorporator is
Delaware Intercorp!"

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