Section 394 - Reserved power of State to amend or repeal chapter; chapter part of corporation's charter or certificate of incorporation

1 Analyses of this statute by attorneys

  1. No express right, no class vote: The current state of Section 242(b)(2)

    Reed SmithMay 23, 2023

    on:To trigger a class vote, an amendment must adversely affect any type of special right (superior or inferior).Express right interpretation:Under this view, Section 242(b)(2) is triggered by any charter amendment that would have an adverse effect on any express right.Equal/same treatment interpretation:Under this interpretation, which stems exclusively from Orban, Section 242(b)(2) "does not provide a class vote when all shares are affected equally by an amendment."Ultimately, the express right interpretation carried the day. As such, the charter amendments did not trigger Section 242(b)(2) because the right to sue was not made express in either company's charter. And even if the Court had adopted a "steel-man version of the express rights interpretation," which incorporated any power, preference, or special right prescribed in the DGCL, "the power to sue would [still] not be protected by Section 242(b)(2)" because no provision of the DGCL expressly provides for the right to sue. See 8 Del. C. § 394 ("This chapter and all amendments thereof shall be part of the charter or certificate of incorporation of every corporation.").[T]here's a lot to be said for the [stockholders'] plain-meaning argument. But I cannot adopt it.The [companies have] been able to trace a textual argument that links powers, preferences, and special rights to the powers, preferences, and special rights made express in a charter under Section 102(a)(4).