Small Business Reading Room

Wednesday, December 10, 2003

Technology Disputes now heard in DE Chancery Court

Anyone who has done some research on incorporating in the State of Delaware knows that there are some advantages to incorporating in the "First State". In fact, we tout 8 good reasons to Incorporate in Delaware on our own website.

Now there are 9.

On May 29, 2003 Governor Ruth Anne Minner signed into law legislation that extends the jurisdiction of the world-renowned Delaware Court of Chancery to cover "technology disputes."

"Technology disputes" is defined in the law as involving the purchase or lease of computer hardware; the development, use, licensing or transfer of computer software; information, biological, pharmaceutical, agricultural or other technology of a complex or scientific nature that has commercial value, or the intellectual property rights pertaining thereto; the creation or operation of Internet web sites; and rights or electronic access to electronic, digital, or similar information. On September 29, 2003 the Rules of the Delaware Court of Chancery were amended 1 to be consistent with the law Governor Ruth Ann Minner singed creating the "technology court" four months earlier.

Governor Minner said the legislation "keeps Delaware on the cutting edge of dispute resolution, and positions Delaware for further growth in the still emerging technology field. It provides further encouragement for entrepreneurs and investors to make Delaware their corporate home."2

But to take advantage of this generously broad definition of "technology disputes", you will need not only to consent to litigate, but also need to certify that the dispute is valued at least at one million dollars. Does this really provide "encouragement for entrepreneurs and investors to make Delaware their corporate home" as Gov. Minner stated? "Absolutely", says Delaware Attorney Larry D. Sullivan. "A million dollars isn’t what it used to be. It is very easy to qualify for this amount in technology disputes- even mom & pop businesses may find themselves in this category."

Score one more for Delaware, the Corporate Gateway to the World.

- Russell Rozanski

1You can view the Chancery Court Order adding Rules 79.1, 91. 92, 93, 94 and 95 as an Adobe .pdf document here or
2read the press release regarding the "Technology Court" from May 29, 2003, at the State of DE’s website press release archives

Monday, December 08, 2003

Corporate Law Meets Behavioral Science

Delaware General Corporation Law, Title 8, Subchapter IV, Section 141 (i):
“Unless otherwise restricted by the certificate of incorporation or bylaws, members of the board of directors of any corporation, or any committee designated by the board, may participate in a meeting of such board, or committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this subsection shall constitute presence in person at the meeting.”

This feature of Delaware law allows the use of telephones, cell phones, virtual meeting programs, teleconferencing and other means not yet imagined. But why is this important? For one thing it makes it very easy for the small corporation with a board of two or three people to hold board meetings via conference call or even a simple phone call. Another feature of the rule mandates that the participants be able to hear each other.

Hearing the other people in the meeting turns out to be very important for efficiency – people tend to make decisions quicker when not required to type or write their responses *– and for the quality of the decisions made – more information is contained in audible speech than in text messages^. For more on the research and its implications for corporate governance please see the article below.

Professor Stephen M. Bainbridge of the University of California, Los Angeles, School of Law has examined the import of this law in relation to these and many more aspects of behavioral science in an article published by the University called “Why a Board? Group Decision Making in Corporate Governance”,*pg 42, ^pg.46. Professor Bainbridge publishes an interesting blog that covers corporate governance and many other topics at The link to his blog entry on this topic is here and he makes the complete article available for download from the University of California site. Professor Bainbridge also has books for sale that examine corporate governance issues on his site.

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

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