Delaware’s prominence as the preferred state for corporate incorporation isn’t just a coincidence – it’s the result of well-established business laws and a sophisticated legal framework that provides clarity and protection for corporations. At the heart of this framework lies the board of directors, whose approval is crucial for many corporate decisions. Understanding which decisions require board approval is essential for maintaining legal compliance and ensuring smooth corporate operations
Key Decisions Requiring Board Approval
Major Corporate Transactions
Under DGCL §251, the board must approve all significant corporate transactions. This includes:
- Mergers and acquisitions, regardless of whether the corporation is the buyer or seller
- Sale, lease, or exchange of substantially all corporate assets
- Formation of strategic partnerships or joint ventures that significantly impact corporate operations
- Major business expansion or diversification initiatives
Issuance of Stock and Equity Decisions
Stock-related decisions are fundamental to corporate governance and require careful board oversight. According to DGCL §151, the board must approve:
- Issuance of new shares of stock
- Implementation of stock option plans and equity compensation programs
- Stock splits and reverse splits
- Declaration of dividends and determination of dividend amounts
- Creation of new classes or series of stock