DealLawyers.com Blog

This recent Greenberg Traurig memo addresses the implications of the 2024 DGCL amendments that drafters of merger agreements, resolutions, and other corporate documents should keep in mind.  This excerpt addresses implications of the provisions of new Section 147 of the DGCL permitting the board to approve a merger agreement in final or “substantially final” form on drafting board resolutions:

New Section 147 provides that, whenever the board of directors is required by the DGCL to approve an agreement, instrument, or document, the agreement, instrument, or document may be “in final form or in substantially final form.” Although “substantially final” is undefined in the DGCL, commentary suggests that it will be limited to inconsequential and immaterial changes. Board resolutions providing such approvals may now be drafted accordingly to permit some flexibility, though counsel should exercise caution when determining whether a board has approved a “substantially final” form of the applicable document. A more conservative approach would track preexisting best practices of board approval in final form.

The memo also addresses the implications of language in Section 147 permitting the board to ratify the final version of a merger agreement as of the date that it previously approved the agreement. It recommends that if the board previously authorized a version of the agreement that wasn’t completely finalized, it may be prudent for the board to adopt pre-closing resolutions ratifying the agreement retroactive to the date of the board’s earlier action approving the agreement.

– John Jenkins