Small Business Reading Room

Wednesday, January 12, 2005

A Constitutional Amendment

The Delaware General Assembly has passed, and the Governor has signed an amendment to the State Constitution that removes the restrictions that were in place on the type of consideration that companies could accept in return for stock.

The amendment is available on line and simply states that Article IV, Section 3 of the State Constitution is removed. The Delaware General Assembly completed the process of eliminating a long-standing provision of the Delaware State Constitution that prohibited a corporation from issuing stock "except for money paid, labor done or personal property, or real estate or leases thereof actually acquired by such corporation." Because of the availability of stock with nominal or no par value, this provision has had little practical importance.

With the elimination of that constitutional provision, the Delaware General Corporation Law has been simplified to provide that stock will be considered fully paid and non-assessable upon receipt by the corporation of the consideration determined by the board of directors.

Once again, the Corporations Law Section of the Delaware State Bar Association is keeping Delaware on the leading edge of corporate law.

A list of all amendments relating to Delaware entities is available from the Division of Corporations.

posted by Larry at 3:24 PM - permalink 0 comments

Small Business Reading Room

A Constitutional Amendment

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