DGCLDelaware General Corporation Law
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First, by having no stockholders, Parent Corporation might be in violation of DGCL [section] 211(b)'s mandate that "an annual meeting of stockholders shall be held for the election of directors on a date and at a time designated by or in the manner provide in the bylaws." Such a meeting is unnecessary because Subsidiary Corporation has no board of directors and so cannot elect directors to it.
(176) DGCL Section 160 imposes the impairment of capital test for determining the legality of distributions, which relies on a balance sheet-based definition of insolvency, focusing on surplus.
Given that intangible assets are a necessary ingredient in the Delaware PIC strategy, DGCL section 1902(b) defines qualifying intangible investments as "investments in stocks, bonds, notes, and other debt obligations (including debt obligations of affiliated corporations), patents, patent applications, trademarks, traded names, and similar types of intangible assets." Although this allows companies broad latitude in selecting the assets to transfer to the PIC, the tax savings are derived from the value of those assets.
Under Section 251(h) of the General Corporation Law of the State of Delaware (the "DGCL"), no vote of Ruckus' stockholders was required to consummate the merger.
DGCL Secretary, Brig ( retd) Sanjiv Mehra, confirmed the development but said he was unaware of the reasons behind it.
Delaware's preeminence in business law starts with its corporate code (the Delaware General Corporation Law or DGCL) and alternative entity statutes, which are continuously reviewed and enhanced with innovations designed to meet the expanding needs of corporate and financial America.
Under Delaware corporate law, "[t]he bylaws of a corporation are presumed to be valid, and the courts will construe the bylaws in a manner consistent with the law rather than strike down the bylaws." (141) Applying the court's reasoning in Boilermakers, if a corporation's charter has granted its board of directors the power unilaterally to adopt bylaw provisions under section 109(a) of the DGCL, then any provision compliant with section 109(b) that the board of directors unilaterally adopts would be statutorily valid.