Entity Existence, Authority, Ownership, and Successor Liability in Acquisition Due Diligence

A Delaware corporation's charter becomes void, and its statutory powers inoperative, if it neglects or refuses for one year to pay franchise tax, or neglects or refuses to file a complete annual franchise tax report, unless the Secretary of State has given further time for good cause.

If any corporation, accepting the Constitution of this State and coming under Chapter 1 of this title, or any corporation which has heretofore filed or may hereafter file a certificate of incorporation under said chapter, neglects or refuses for 1 year to pay the State any franchise tax or taxes, which has or have been, or shall be assessed against it, or which it is required to pay under this chapter, or shall neglect or refuse to file a complete annual franchise tax report, the charter of the corporation shall be void, and all powers conferred by law upon the corporation are declared inoperative, unless the Secretary of State, for good cause shown, shall have given further time for payment of the tax or taxes or the completion of an annual franchise tax report, in which case a certificate thereof shall be filed in the office of the Secretary of State stating the reason therefor.

See 8 Del. C. § 510 (2026).

The Delaware Secretary of State reports that more than 2.28 million entities and over two-thirds of the Fortune 500 call Delaware their corporate home. The report does not state a share of acquisition targets.

Delaware offers the most predictable and business-focused legal home in the world, which is why more than 2.28 million entities and over two-thirds of the Fortune 500 call Delaware their corporate home.

See Del. Div. of Corps., 2025 Annual Report (accessed Oct. 5, 2026).

Corporate existence begins on filing of the certificate of incorporation, subject to § 103(d), and continues subject to dissolution or other termination.

Upon the filing with the Secretary of State of the certificate of incorporation, executed and acknowledged in accordance with § 103 of this title, the incorporator or incorporators who signed the certificate, and such incorporator’s or incorporators’ successors and assigns, shall, from the date of such filing, be and constitute a body corporate, by the name set forth in the certificate, subject to § 103(d) of this title and subject to dissolution or other termination of its existence as provided in this chapter.

See 8 Del. C. § 106 (2026).

A filed instrument may provide that it becomes effective at a specified later time, no later than the ninetieth day after its filing date.

Any instrument may provide that it is not to become effective until a specified time subsequent to the time it is filed, but such time shall not be later than a time on the ninetieth day after the date of its filing.

See 8 Del. C. § 103(d) (2026).

A Delaware limited liability company is formed at the filing of its initial certificate of formation, or at a later date or time the certificate specifies, if there has been substantial compliance with § 18-201; it is a separate legal entity until its certificate of formation is cancelled.

A limited liability company is formed at the time of the filing of the initial certificate of formation in the office of the Secretary of State or at any later date or time specified in the certificate of formation if, in either case, there has been substantial compliance with the requirements of this section. A limited liability company formed under this chapter shall be a separate legal entity, the existence of which as a separate legal entity shall continue until cancellation of the limited liability company’s certificate of formation.

See 6 Del. C. § 18-201(b) (2026).

A duly certified copy of a certificate filed with the Delaware Secretary of State is prima facie evidence of its due execution, acknowledgment and filing, of the conditions precedent to its effectiveness, and of the facts it states.

A copy of a certificate of incorporation, or a restated certificate of incorporation, or of any other certificate which has been filed in the office of the Secretary of State as required by any provision of this title shall, when duly certified by the Secretary of State, be received in all courts, public offices and official bodies as prima facie evidence of: (1) Due execution, acknowledgment and filing of the instrument; (2) Observance and performance of all acts and conditions necessary to have been observed and performed precedent to the instrument becoming effective; and (3) Any other facts required or permitted by law to be stated in the instrument.

See 8 Del. C. § 105 (2026).

A Delaware short-form certificate of status states the entity's name and its status at the time the certificate is issued; a long-form certificate of good standing also lists the documents filed, with the status at the time of issue.

The fee is $50.00 per certificate for a short form certificate of status (includes the name of the entity and the status at the time the certificate is issued) or $175.00 for a Long Form certificate of Good Standing (states all documents that have been filed, including the dates and times and any name changes that occurred along with the status at the time the certificate is issued).

See Del. Div. of Corps., Accessing Corporate Information (accessed Oct. 5, 2026).

Example: a filed asset purchase agreement requires the seller to deliver at closing a certificate it executes attaching formation documents certified not more than twenty-one days before closing, its governing documents, its authorizing resolutions and a good-standing certificate dated within ten days of closing.

(a) A certificate of the Company, dated the day of Closing and duly executed by the Company, certifying as to (i) certified copies of the Articles of Incorporation or Articles of Organization of the Company, as amended, certified not more than twenty-one (21) days prior to the Closing; (ii) a copy of the By-Laws, Operating Agreement or similar agreement of the Company, as amended, in effect as of Closing; (iii) a copy of the authoring resolutions of the Company and of the Owner authorizing the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated in this Agreement; and (iv) a copy of a good standing certificate for the Company issued by the Secretary of State of the Company’s jurisdiction of formation dated within ten (10) days of the date of Closing;

See Asset Purchase Agreement § 8.1(a) (Ex. 2.1), First Watch Restaurant Group, Inc., Current Report (Form 8-K) (filed Nov. 12, 2024).

Example: the seller represents that it is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization.

The Company is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization.

See Asset Purchase Agreement § 4.1 (Ex. 2.1), First Watch Restaurant Group, Inc., Current Report (Form 8-K) (filed Nov. 12, 2024).

Example: the agreement's representations generally survive eighteen months after closing, but the representations in listed sections, including the § 4.1 organization representation, survive indefinitely.

(a) Except as set forth below, the representations and warranties in this Agreement shall survive until eighteen (18) months following the Closing (the “Release Date”). On the Release Date, the representations and warranties in this Agreement shall expire and be of no further force or effect, except that if within such period of time the indemnified party gives the 42 indemnifying party written notice of a claim for breach thereof describing in reasonable detail the nature and basis of such claim, then such claim shall survive until the earlier of resolution of such claim or expiration of the applicable statute of limitations; provided, however, (i) the representations and warranties in Section 3.1, Section 3.2, Section 3.3, Section 3.4, Section 4.1, Section 4.2, Section 4.6, Section 4.13 and Section 4.25 shall survive indefinitely, and (ii) the representations and warranties in Section 4.4 Section 4.10, Section 4.15, Section 4.16, and Section 4.29 shall survive until ninety (90) days after the expiration of all applicable statute of limitations relating to such representations and warranties.

See Asset Purchase Agreement § 9.1(a) (Ex. 2.1), First Watch Restaurant Group, Inc., Current Report (Form 8-K) (filed Nov. 12, 2024).

A corporation whose certificate of incorporation has become forfeited or void may procure a revival at any time, with its rights and franchises and subject to its duties, debts and liabilities, by complying with § 312; § 312 does not apply to a certificate revoked or forfeited under § 284.

(b) Any corporation whose certificate of incorporation has become forfeited or void pursuant to this title may at any time procure a revival of its certificate of incorporation, together with all the rights, franchises, privileges and immunities and subject to all of its duties, debts and liabilities which had been secured or imposed by its original certificate of incorporation and all amendments thereto, by complying with the requirements of this section. Notwithstanding the foregoing, this section shall not be applicable to a corporation whose certificate of incorporation has been revoked or forfeited pursuant to § 284 of this title.

See 8 Del. C. § 312(b) (2026).

Revival is procured as authorized by the board of directors or governing body in accordance with § 312(h) and by executing, acknowledging and filing a certificate of revival in accordance with § 103.

The revival of the certificate of incorporation may be procured as authorized by the board of directors or members of the governing body of the corporation in accordance with subsection (h) of this section and by executing, acknowledging and filing a certificate of revival in accordance with § 103 of this title.

See 8 Del. C. § 312(c) (2026).

On the filing of the certificate of revival in accordance with § 103, the corporation is revived with the same force and effect as if its certificate of incorporation had not been forfeited or void.

Upon the filing of the certificate in accordance with § 103 of this title the corporation shall be revived with the same force and effect as if its certificate of incorporation had not been forfeited or void pursuant to this title.

See 8 Del. C. § 312(e) (2026).

Revival under § 312 validates contracts and acts done within the scope of the certificate of incorporation while it was forfeited or void, as if the certificate had at all times remained in force.

Such revival shall validate all contracts, acts, matters and things made, done and performed within the scope of its certificate of incorporation by the corporation, its directors or members of its governing body, officers, agents and stockholders or members during the time when its certificate of incorporation was forfeited or void pursuant to this title, with the same force and effect and to all intents and purposes as if the certificate of incorporation had at all times remained in full force and effect.

See 8 Del. C. § 312(e) (2026).

A reviving corporation must pay the franchise taxes, penalties and interest due when its certificate became forfeited or void; after more than five years, it instead pays three times the current year's annual franchise tax.

(g) Any corporation that revives its certificate of incorporation under this chapter shall pay to this State a sum equal to all franchise taxes, penalties and interest thereon due at the time its certificate of incorporation became forfeited or void pursuant to this title; provided, however, that any corporation that revives its certificate of incorporation under this chapter whose certificate of incorporation has been forfeited or void for more than 5 years shall, in lieu of the payment of the franchise taxes and penalties otherwise required by this subsection, pay a sum equal to 3 times the amount of the annual franchise tax that would be due and payable by such corporation for the year in which the revival is effected, computed at the then current rate of taxation.

See 8 Del. C. § 312(g) (2026).

The Division of Corporations will not file a revival certificate until the taxes due when the corporation became void are paid and the applicable annual franchise tax reports are filed.

Before the Certificate can be filed, all taxes due to the State at the time the corporation became void must be paid and all applicable Annual Franchise Tax Reports must be filed.

See Del. Div. of Corps., Certificate of Revival of Charter for a Voided Corporation (rev. Aug. 2023) (accessed Oct. 5, 2026).

When a § 204 certificate of validation relates to a time when the certificate of incorporation was forfeited or void, the annual reports and franchise taxes for that period, with interest, must be filed and paid when the certificate of validation is filed.

If the filing of a certificate of validation under § 204 of this title relates to a time during which the corporation’s certificate of incorporation had been forfeited or void, the annual reports and annual franchise taxes that would have been required to be filed and paid during the period in which the corporation’s certificate of incorporation had been forfeited or void, including interest thereon, are required to be filed and paid at the time of the filing of such certificate of validation.

See 8 Del. C. § 312(g) (2026).

Practitioner account: the 2025 amendments to § 312 made a revived corporation that later files a certificate of validation for acts taken while it was forfeited or void pay the franchise taxes for that period.

Section 312 of the DGCL was amended to provide that if a corporation is revived and it later files a certificate of validation with respect to acts taken when it was forfeited or void, then the corporation must pay the annual franchise taxes that would have been required during the period the certificate of incorporation was forfeited or void.

See Dorsey & Whitney LLP, 2025 Amendments to Delaware Entity Statutes (Aug. 1, 2025).

A Delaware limited liability company's certificate of formation is canceled if its annual tax is not paid for three years from its due date, effective on the third anniversary of that due date.

(a) The certificate of formation of a domestic limited liability company shall be canceled if the annual tax due under § 18-1107 of this title for the domestic limited liability company is not paid for a period of 3 years from the date it is due, such cancellation to be effective on the third anniversary of such due date.

See 6 Del. C. § 18-1108(a) (2026).

A limited liability company whose certificate of formation was canceled under § 18-1108(a), among other provisions, may be revived by filing a certificate of revival with the fee and the annual tax, penalties and interest due at the time of cancellation.

(a) A domestic limited liability company whose certificate of formation has been canceled pursuant to § 18-104(d), § 18-104(i)(4) or § 18-1108(a) of this title may be revived by filing in the office of the Secretary of State a certificate of revival of limited liability company accompanied by the payment of the fee required by § 18-1105(a)(3) of this title and payment of the annual tax due under § 18-1107 of this title and all penalties and interest thereon due at the time of the cancellation of its certificate of formation.

See 6 Del. C. § 18-1109(a) (2026).

Revival of a limited liability company validates contracts and acts done while its certificate of formation was canceled, as if the certificate had remained in full force and effect.

Such revival shall validate all contracts, acts, matters and things made, done and performed by the limited liability company, any protected series or registered series thereof, or by the members, managers, employees and agents of the limited liability company or such series during the time when the certificate of formation of the limited liability company was canceled pursuant to § 18-104(d), § 18-104(i)(4) or § 18-1108(a) of this title, with the same force and effect and to all intents and purposes as if the certificate of formation of the limited liability company had remained in full force and effect.

See 6 Del. C. § 18-1109(c) (2026).

Subject to the exemptions listed in § 373, a corporation organized outside Delaware may not do business in Delaware through branch offices, agents or representatives located there until it pays the statutory fee and files the required documents, beginning with a certificate of its corporate existence from its jurisdiction of incorporation dated within six months of filing.

(b) No foreign corporation shall do any business in this State, through or by branch offices, agents or representatives located in this State, until it shall have paid to the Secretary of State of this State for the use of this State, $80, and shall have filed in the office of the Secretary of State: (1) A certificate, as of a date not earlier than 6 months prior to the filing date, issued by an authorized officer of the jurisdiction of its incorporation evidencing its corporate existence.

See 8 Del. C. § 371(b)(1) (2026).

A foreign corporation need not qualify under §§ 371 and 372 in listed circumstances, including a mail-order business, soliciting orders through salespersons (whether or not it keeps sales offices in Delaware) with orders approved and goods shipped from outside the state, certain equipment sales with installation services, and business operations in Delaware that are wholly interstate in character.

(a) No foreign corporation shall be required to comply with §§ 371 and 372 of this title, under any of the following conditions: (1) If it is in the mail order or a similar business, merely receiving orders by mail or otherwise in pursuance of letters, circulars, catalogs or other forms of advertising, or solicitation, accepting the orders outside this State, and filling them with goods shipped into this State; (2) If it employs salespersons, either resident or traveling, to solicit orders in this State, either by display of samples or otherwise (whether or not maintaining sales offices in this State), all orders being subject to approval at the offices of the corporation without this State, and all goods applicable to the orders being shipped in pursuance thereof from without this State to the vendee or to the seller or such seller’s agent for delivery to the vendee, and if any samples kept within this State are for display or advertising purposes only, and no sales, repairs or replacements are made from stock on hand in this State; (3) If it sells, by contract consummated outside this State, and agrees, by the contract, to deliver into this State, machinery, plants or equipment, the construction, erection or installation of which within this State requires the supervision of technical engineers or skilled employees performing services not generally available, and as a part of the contract of sale agrees to furnish such services, and such services only, to the vendee at the time of construction, erection or installation; (4) If its business operations within this State, although not falling within the terms of paragraphs (a)(1), (2) and (3) of this section or any of them, are nevertheless wholly interstate in character;

See 8 Del. C. § 373(a)(1)–(4) (2026).

A foreign corporation required to qualify that has done business in Delaware without authority may not maintain any action or special proceeding in Delaware until it is authorized and has paid all fees, penalties and franchise taxes for the period of unauthorized business; the bar does not apply to its successor in interest.

(a) A foreign corporation which is required to comply with §§ 371 and 372 of this title and which has done business in this State without authority shall not maintain any action or special proceeding in this State unless and until such corporation has been authorized to do business in this State and has paid to the State all fees, penalties and franchise taxes for the years or parts thereof during which it did business in this State without authority. This prohibition shall not apply to any successor in interest of such foreign corporation.

See 8 Del. C. § 383(a) (2026).

A sale, lease or exchange of all or substantially all corporate assets requires board action and a resolution of the holders of a majority of the outstanding stock entitled to vote, at a meeting called on at least 20 days' notice.

(a) Every corporation may at any meeting of its board of directors or governing body sell, lease or exchange all or substantially all of its property and assets, including its goodwill and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or other property, including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors or governing body deems expedient and for the best interests of the corporation, when and as authorized by a resolution adopted by the holders of a majority of the outstanding stock of the corporation entitled to vote thereon or, if the corporation is a nonstock corporation, by a majority of the members having the right to vote for the election of the members of the governing body and any other members entitled to vote thereon under the certificate of incorporation or the bylaws of such corporation, at a meeting duly called upon at least 20 days’ notice.

See 8 Del. C. § 271(a) (2026).

The board of each Delaware constituent corporation must adopt a resolution approving the merger agreement and declaring its advisability.

The board of directors of each corporation which desires to merge or consolidate shall adopt a resolution approving an agreement of merger or consolidation and declaring its advisability.

See 8 Del. C. § 251(b) (2026).

A merger agreement is adopted when a majority of the outstanding stock entitled to vote is voted for it.

If a majority of the outstanding stock of the corporation entitled to vote thereon shall be voted for the adoption of the agreement, that fact shall be certified on the agreement by the secretary or assistant secretary of the corporation, provided that such certification on the agreement shall not be required if a certificate of merger or consolidation is filed in lieu of filing the agreement.

See 8 Del. C. § 251(c) (2026).

A sale of assets quantitatively vital to the corporation's operation that is out of the ordinary and substantially affects its existence and purpose is beyond the board's power acting alone.

If the sale is of assets quantitatively vital to the operation of the corporation and is out of the ordinary and substantially affects the existence and purpose of the corporation, then it is beyond the power of the Board of Directors.

See Gimbel v. Signal Cos., 316 A.2d 599 (Del. Ch. 1974).

Applying its test, the court held that the sale of the Signal Oil subsidiary's stock was not a sale of all or substantially all of Signal's assets.

I conclude that measured quantatively and qualitatively, the sale of the stock of Signal Oil by Signal to Burmah does not constitute a sale of “all or substantially all” of Signal’s assets.

See Gimbel v. Signal Cos., 316 A.2d 599 (Del. Ch. 1974).

Section 271 does not require a stockholder vote on the sale of a major or trophy asset unless the assets sold, considered quantitatively and qualitatively, amount to substantially all of the corporation's assets.

Section 271 does not require a vote when a major asset or trophy is sold; it requires a vote only when the assets to be sold, when considered quantitatively and qualitatively, amount to “substantially all” of the corporation’s assets.

See Hollinger Inc. v. Hollinger Int'l, Inc., 858 A.2d 342 (Del. Ch. 2004).

Unless the certificate of incorporation provides otherwise, stockholder action may be taken without a meeting by signed consents carrying the votes a meeting would require, delivered as the section requires.

Unless otherwise provided in the certificate of incorporation, any action required by this chapter to be taken at any annual or special meeting of stockholders of a corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation in the manner required by this section.

See 8 Del. C. § 228(a) (2026).

A written consent is effective only if consents signed by enough holders are delivered within 60 days of the first consent delivered.

No consent shall be effective to take the corporate action referred to therein unless consents signed by a sufficient number of holders or members to take action are delivered to the corporation in the manner required by this section within 60 days of the first date on which a consent is so delivered to the corporation.

See 8 Del. C. § 228(c) (2026).

Action by less than unanimous written consent requires prompt notice to the record-date holders who did not consent and who would have been entitled to notice of a meeting.

If an action by consent under subsections (a) or (b) of this section has been taken by stockholders or members by less than unanimous consent, prompt notice of the taking of the action by consent shall be given to those stockholders or members as of the record date for the action by consent who have not consented and who would have been entitled to notice of the meeting if the action had been taken at a meeting and the record date for the notice of the meeting were the record date for the action by consent.

See 8 Del. C. § 228(e) (2026).

Unless the limited liability company agreement provides otherwise, management is vested in the members, with members owning more than 50 percent of the members' current interests in profits controlling; if the agreement provides for management by a manager, management is vested in the manager only to the extent so provided.

Unless otherwise provided in a limited liability company agreement, the management of a limited liability company shall be vested in its members in proportion to the then current percentage or other interest of members in the profits of the limited liability company owned by all of the members, the decision of members owning more than 50 percent of the said percentage or other interest in the profits controlling; provided however, that if a limited liability company agreement provides for the management, in whole or in part, of a limited liability company by a manager, the management of the limited liability company, to the extent so provided, shall be vested in the manager who shall be chosen in the manner provided in the limited liability company agreement.

See 6 Del. C. § 18-402 (2026).

Unless the limited liability company agreement provides otherwise, a merger is approved by members owning more than 50 percent of the members' current interests in profits.

Unless otherwise provided in the limited liability company agreement, an agreement of merger or consolidation or a plan of merger shall be approved by each domestic limited liability company which is to merge or consolidate by members who own more than 50 percent of the then current percentage or other interest in the profits of the domestic limited liability company owned by all of the members.

See 6 Del. C. § 18-209(b) (2026).

The sale did not involve substantially all of the seller's assets because substantial operating and non-operating assets would be retained and the seller would remain a profitable business.

By any reasonable interpretation, the Telegraph sale does not involve substantially all of International’s assets as substantial operating (and non-operating) assets will be retained, and International will remain a profitable publishing concern.

See Hollinger Inc. v. Hollinger Int'l, Inc., 858 A.2d 342 (Del. Ch. 2004).

A defective corporate act or putative stock is not void or voidable solely for a failure of authorization if it is ratified under § 204 or validated by the Court of Chancery under § 205.

(a) Subject to subsection (f) of this section, no defective corporate act or putative stock shall be void or voidable solely as a result of a failure of authorization if ratified as provided in this section or validated by the Court of Chancery in a proceeding brought under § 205 of this title.

See 8 Del. C. § 204(a) (2026).

A holder who makes a demand under § 262(d), holds continuously through the effective date, and neither votes for the merger nor consents to it in writing is entitled to a Court of Chancery appraisal of the fair value of the shares in the circumstances § 262(b) and (c) describe.

(a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger, consolidation, conversion, transfer, domestication or continuance, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger, consolidation, conversion, transfer, domestication or continuance nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section.

See 8 Del. C. § 262(a) (2026).

Unless the limited liability company agreement, a merger or consolidation agreement, a plan of merger or a plan of division provides otherwise, no appraisal rights are available for a limited liability company interest, including on a sale of all or substantially all of the company's assets.

Unless otherwise provided in a limited liability company agreement or an agreement of merger or consolidation or a plan of merger or a plan of division, no appraisal rights shall be available with respect to a limited liability company interest or another interest in a limited liability company, including in connection with any amendment of a limited liability company agreement, any merger or consolidation in which the limited liability company or a registered series of the limited liability company is a constituent party to the merger or consolidation, any division of the limited liability company, any conversion of the limited liability company to another business form, any conversion of a protected series of the limited liability company to a registered series of such limited liability company, any conversion of a registered series of the limited liability company to a protected series of such limited liability company, any transfer to or domestication or continuance in any jurisdiction by the limited liability company, or the sale of all or substantially all of the limited liability company’s assets.

See 6 Del. C. § 18-210 (2026).

The Court of Chancery may declare a § 204 ratification ineffective or conditional, validate a defective corporate act or putative stock on conditions, and require measures to remedy or avoid harm to substantially and adversely affected persons.

(b) In connection with an action under this section, the Court of Chancery may: (1) Declare that a ratification in accordance with and pursuant to § 204 of this title is not effective or shall only be effective at a time or upon conditions established by the Court; (2) Validate and declare effective any defective corporate act or putative stock and impose conditions upon such validation by the Court; (3) Require measures to remedy or avoid harm to any person substantially and adversely affected by a ratification pursuant to § 204 of this title or from any order of the Court pursuant to this section, excluding any harm that would have resulted if the defective corporate act had been valid when approved or effectuated;

See 8 Del. C. § 205(b)(1)-(3) (2026).

An act ratified under § 18-106(e), or one whose noncompliance with the limited liability company agreement is waived under it, is deemed validly taken at the time it was taken.

Any act or transaction ratified, or with respect to which the failure to comply with any requirements of the limited liability company agreement is waived, pursuant to this subsection shall be deemed validly taken at the time of such act or transaction.

See 6 Del. C. § 18-106(e) (2026).

A ratification or waiver under § 18-106(e) may be express or implied, including by the statements, action, inaction or acquiescence of members, managers or other persons.

Any such ratification or waiver may be express or implied, including by the statements, action, inaction, or acquiescence of or by such members, managers, or other persons.

See 6 Del. C. § 18-106(e) (2026).

Practitioner account: the 2025 amendments clarified that ratification or waiver under the alternative-entity statutes may be implied through statements, action, inaction or acquiescence.

Next, the amendments clarify that the ratification or waiver pursuant to the Alt Entity Acts may be accomplished not only through express actions of the parties, but also may be implied through statements, action, inaction or acquiescence.

See Dorsey & Whitney LLP, 2025 Amendments to Delaware Entity Statutes (Aug. 1, 2025).

A certificate of incorporation may require, for any corporate action, the vote of a larger portion of the stock, or of any class or series, or of a larger number of directors, than the statute requires.

(4) Provisions requiring for any corporate action, the vote of a larger portion of the stock or of any class or series thereof, or of any other securities having voting power, or a larger number of the directors, than is required by this chapter; (5) A provision limiting the duration of the corporation’s existence to a specified date; otherwise, the corporation shall have perpetual existence; (6) A provision imposing personal liability for the debts of the corporation on its stockholders to a specified extent and upon specified conditions; otherwise, the stockholders of a corporation shall not be personally liable for the payment of the corporation’s debts except as they may be liable by reason of their own conduct or acts;

See 8 Del. C. § 102(b)(4)-(6) (2026).

A Delaware corporation may contract to restrict itself from specified actions, to require the approval or consent of persons or bodies, including stockholders, before specified actions, and to covenant that persons or bodies will take or refrain from specified actions.

Without limiting the provisions that may be included in any such contracts, the corporation may agree to: (a) restrict or prohibit itself from taking actions specified in the contract, (b) require the approval or consent of 1 or more persons or bodies before the corporation may take actions specified in the contract (which persons or bodies may include the board of directors or 1 or more current or future directors, stockholders or beneficial owners of stock of the corporation), and (c) covenant that the corporation or 1 or more persons or bodies will take, or refrain from taking, actions specified in the contract (which persons or bodies may include the board of directors or 1 or more current or future directors, stockholders or beneficial owners of stock of the corporation).

See 8 Del. C. § 122(18) (2026).

Unless its certificate of incorporation requires one, no vote of a surviving constituent corporation's stockholders is needed for a merger that does not amend its certificate, leaves each share outstanding immediately before the effective date an identical outstanding or treasury share of the survivor, and either issues or delivers no common stock or convertible securities under the plan, or issues or delivers unissued or treasury common shares that, together with those initially issuable on conversion of other shares, securities or obligations issued or delivered under the plan, do not exceed 20 percent of its common stock outstanding immediately before the effective date.

(f) Notwithstanding the requirements of subsection (c) of this section, unless required by its certificate of incorporation, no vote of stockholders of a constituent corporation surviving a merger shall be necessary to authorize a merger if (1) the agreement of merger does not amend in any respect the certificate of incorporation of such constituent corporation, (2) each share of stock of such constituent corporation outstanding immediately prior to the effective date of the merger is to be an identical outstanding or treasury share of the surviving corporation after the effective date of the merger, and (3) either no shares of common stock of the surviving corporation and no shares, securities or obligations convertible into such stock are to be issued or delivered under the plan of merger, or the authorized unissued shares or the treasury shares of common stock of the surviving corporation to be issued or delivered under the plan of merger plus those initially issuable upon conversion of any other shares, securities or obligations to be issued or delivered under such plan do not exceed 20% of the shares of common stock of such constituent corporation outstanding immediately prior to the effective date of the merger.

See 8 Del. C. § 251(f) (2026).

A charter provision requiring stockholder authorization or consent for an asset sale does not apply to a § 272(b) transaction unless it expressly so requires, and this rule applies only to charter provisions first effective on or after August 1, 2023.

(d) A provision of the certificate of incorporation that requires the authorization or consent of stockholders for a sale, lease or exchange of property or assets shall not apply to a transaction permitted by subsection (b) of this section unless such provision expressly so requires; provided that this subsection (d) shall apply only to certificate of incorporation provisions that first become effective on or after August 1, 2023.

See 8 Del. C. § 272(d) (2026).

No § 271(a) stockholder resolution is required for a sale of mortgaged or pledged assets that the secured party effects by exercising its rights, or that the board authorizes in lieu of that exercise to reduce or eliminate the secured obligations, if the assets are worth no more than the obligations reduced or eliminated and the sale is not prohibited by the law governing the mortgage or pledge.

(b) Without limiting the rights of a secured party under applicable law, no resolution by stockholders shall be required by § 271(a) of this title for a sale, lease or exchange of property or assets if such property or assets are collateral that secures a mortgage or are pledged to a secured party and either: (1) The secured party exercises its rights under the law governing such mortgage or pledge or other applicable law, whether under Article 9 of a Uniform Commercial Code [§ 9-101 et seq. of Title 6], a real property law or other law, to effect such sale, lease or exchange without the consent of the corporation; or (2) In lieu of the secured party exercising such rights, the board of directors of the corporation authorizes an alternative sale, lease or exchange of such property or assets, whether with the secured party or with another person, that results in the reduction or elimination of the total liabilities or obligations secured by such property or assets, provided that (i) the value of such property or assets is less than or equal to the total amount of such liabilities or obligations being eliminated or reduced and (ii) such sale, lease or exchange is not prohibited by the law governing such mortgage or pledge.

See 8 Del. C. § 272(b) (2026).

For § 271, a corporation's property and assets include those of any wholly owned and controlled subsidiary, and, except as the certificate of incorporation provides, no stockholder resolution is required for a sale of the corporation's assets to such a subsidiary.

(c) For purposes of this section only, the property and assets of the corporation include the property and assets of any subsidiary of the corporation. As used in this subsection, “subsidiary” means any entity wholly-owned and controlled, directly or indirectly, by the corporation and includes, without limitation, corporations, partnerships, limited partnerships, limited liability partnerships, limited liability companies, and/or statutory trusts. Notwithstanding subsection (a) of this section, except to the extent the certificate of incorporation otherwise provides, no resolution by stockholders or members shall be required for a sale, lease or exchange of property and assets of the corporation to a subsidiary.

See 8 Del. C. § 271(c) (2026).

Ratification under § 204 and validation under § 205 are not the exclusive means of ratifying or validating a corporate act or stock issuance, and their absence does not of itself affect the validity of an act or stock properly ratified under common law or otherwise.

(i) Ratification under this section or validation under § 205 of this title shall not be deemed to be the exclusive means of ratifying or validating any act or transaction taken by or on behalf of the corporation, including any defective corporate act, or any issuance of stock, including any putative stock, or of adopting or endorsing any act or transaction taken by or in the name of the corporation prior to the commencement of its existence, and the absence or failure of ratification in accordance with either this section or validation under § 205 of this title shall not, of itself, affect the validity or effectiveness of any act or transaction or the issuance of any stock properly ratified under common law or otherwise, nor shall it create a presumption that any such act or transaction is or was a defective corporate act or that such stock is void or voidable.

See 8 Del. C. § 204(i) (2026).

A corporation may issue classes and series of stock with full, limited or no voting powers and with the preferences and special rights stated in the certificate of incorporation or in a board resolution adopted under authority the certificate expressly grants.

(a) Every corporation may issue 1 or more classes of stock or 1 or more series of stock within any class thereof, any or all of which classes may be of stock with par value or stock without par value and which classes or series may have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the certificate of incorporation or of any amendment thereto, or in the resolution or resolutions providing for the issue of such stock adopted by the board of directors pursuant to authority expressly vested in it by the provisions of its certificate of incorporation.

See 8 Del. C. § 151(a) (2026).

A defective corporate act includes an overissue and any act that was within the corporation's power but is void or voidable due to a failure of authorization; a failure of authorization includes a failure to authorize or effect an act in compliance with the statute, the certificate of incorporation or bylaws, or a plan or agreement, if and to the extent that failure would render the act void or voidable, and a failure of the board or an officer to give an approval the act required.

(1) “Defective corporate act” means an overissue, an election or appointment of directors that is void or voidable due to a failure of authorization, or any act or transaction purportedly taken by or on behalf of the corporation that is, and at the time such act or transaction was purportedly taken would have been, within the power of a corporation under subchapter II of this chapter (without regard to the failure of authorization identified in § 204(b)(1)(D) of this title), but is void or voidable due to a failure of authorization; (2) “Failure of authorization” means: (i) the failure to authorize or effect an act or transaction in compliance with (A) the provisions of this title, (B) the certificate of incorporation or bylaws of the corporation, or (C) any plan or agreement to which the corporation is a party or the disclosure set forth in any proxy or consent solicitation statement, if and to the extent such failure would render such act or transaction void or voidable; or (ii) the failure of the board of directors or any officer of the corporation to authorize or approve any act or transaction taken by or on behalf of the corporation that would have required for its due authorization the approval of the board of directors or such officer;

See 8 Del. C. § 204(h)(1)-(2) (2026).

On application by the corporation, a successor entity, a director, a record or beneficial holder of valid or putative stock, or another person substantially and adversely affected by a ratification, the Court of Chancery may determine the validity of any corporate act or transaction and of any stock, rights or options.

(a) Subject to subsection (f) of this section, upon application by the corporation, any successor entity to the corporation, any member of the board of directors, any record or beneficial holder of valid stock or putative stock, any record or beneficial holder of valid or putative stock as of the time of a defective corporate act ratified pursuant to § 204 of this title, or any other person claiming to be substantially and adversely affected by a ratification pursuant to § 204 of this title, the Court of Chancery may: (1) Determine the validity and effectiveness of any defective corporate act ratified pursuant to § 204 of this title; (2) Determine the validity and effectiveness of the ratification of any defective corporate act pursuant to § 204 of this title; (3) Determine the validity and effectiveness of any defective corporate act not ratified or not ratified effectively pursuant to § 204 of this title; (4) Determine the validity of any corporate act or transaction and any stock, rights or options to acquire stock; and

See 8 Del. C. § 205(a)(1)-(4) (2026).

The stockholder's motion for a preliminary injunction against the sale was denied because neither its § 271 claim nor its equitable claims had a reasonable probability of success.

In this opinion, I conclude that Inc.’s motion for a preliminary injunction motion should be denied as neither its § 271 nor its equitable claims have a reasonable probability of success.

See Hollinger Inc. v. Hollinger Int'l, Inc., 858 A.2d 342 (Del. Ch. 2004).

A corporation may provide in its certificate of incorporation that § 262 appraisal rights are available for shares of any class or series as a result of, among other events, the sale of all or substantially all of its assets.

(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation, the sale of all or substantially all of the assets of the corporation or a conversion effected pursuant to § 266 of this title or a transfer, domestication or continuance effected pursuant to § 390 of this title.

See 8 Del. C. § 262(c) (2026).

For examining the stockholder list and voting in person or by proxy at a meeting, the stock ledger is the only evidence of who the stockholders are.

The stock ledger shall be the only evidence as to who are the stockholders entitled by this section to examine the list required by this section or to vote in person or by proxy at any meeting of stockholders.

See 8 Del. C. § 219(c) (2026).

A written, signed agreement between two or more stockholders may provide how their shares are voted.

An agreement between 2 or more stockholders, if in writing and signed by the parties thereto, may provide that in exercising any voting rights, the shares held by them shall be voted as provided by the agreement, or as the parties may agree, or as determined in accordance with a procedure agreed upon by them.

See 8 Del. C. § 218(c) (2026).

A Delaware corporation may contract to restrict itself from specified actions, to require the approval or consent of persons or bodies, including stockholders, before specified actions, and to covenant that persons or bodies will take or refrain from specified actions.

Without limiting the provisions that may be included in any such contracts, the corporation may agree to: (a) restrict or prohibit itself from taking actions specified in the contract, (b) require the approval or consent of 1 or more persons or bodies before the corporation may take actions specified in the contract (which persons or bodies may include the board of directors or 1 or more current or future directors, stockholders or beneficial owners of stock of the corporation), and (c) covenant that the corporation or 1 or more persons or bodies will take, or refrain from taking, actions specified in the contract (which persons or bodies may include the board of directors or 1 or more current or future directors, stockholders or beneficial owners of stock of the corporation).

See 8 Del. C. § 122(18) (2026).

A limited liability company interest is assignable except as the agreement provides; an assignee has no right to participate in management except as the agreement provides or, unless the agreement provides otherwise, with the consent of all members.

A limited liability company interest is assignable in whole or in part except as provided in a limited liability company agreement. The assignee of a member’s limited liability company interest shall have no right to participate in the management of the business and affairs of a limited liability company except as provided in a limited liability company agreement or, unless otherwise provided in the limited liability company agreement, upon the vote or consent of all of the members of the limited liability company.

See 6 Del. C. § 18-702(a) (2026).

Unless the agreement provides otherwise, an assignment gives the assignee the assigned economic rights but not the right to become a member or exercise a member's rights or powers.

(b) Unless otherwise provided in a limited liability company agreement: (1) An assignment of a limited liability company interest does not entitle the assignee to become or to exercise any rights or powers of a member; (2) An assignment of a limited liability company interest entitles the assignee to share in such profits and losses, to receive such distribution or distributions, and to receive such allocation of income, gain, loss, deduction, or credit or similar item to which the assignor was entitled, to the extent assigned;

See 6 Del. C. § 18-702(b)(1)-(2) (2026).

An assignee becomes a member as the agreement provides, by the consent of all members unless the agreement provides otherwise, or through a voluntary assignment of all interests by a sole member to a single assignee unless the agreement or assignment displaces that route.

(a) An assignee of a limited liability company interest becomes a member: (1) As provided in the limited liability company agreement; (2) Unless otherwise provided in the limited liability company agreement, upon the vote or consent of all of the members of the limited liability company; or (3) Unless otherwise provided in the limited liability company agreement by a specific reference to this subsection or otherwise provided in connection with the assignment, upon the voluntary assignment by the sole member of the limited liability company of all of the limited liability company interests in the limited liability company to a single assignee. An assignment will be voluntary for purposes of this subsection if it is consented to by the member at the time of the assignment and is not effected by foreclosure or other similar legal process.

See 6 Del. C. § 18-704(a) (2026).

FinCEN's final rule, effective August 14, 2026, exempts U.S. companies from beneficial ownership information reporting, so they are no longer required to file BOI reports.

On August 11, the Financial Crimes Enforcement Network (FinCEN) issued a final rule making permanent the beneficial ownership information (BOI) reporting exemptions first introduced in the interim final rule published on March 26, 2025. The rule also expands relief for U.S. persons. Under the final rule: - U.S. companies are exempt from BOI reporting requirements and therefore, are no longer required to file BOI reports. - Reporting companies do not need to report BOI for U.S. person beneficial owners or U.S. person company applicants. - U.S. persons do not need to provide BOI to reporting companies where they are beneficial owners or company applicants. - U.S. persons with a FinCEN ID are not required to update or correct the information they previously submitted to FinCEN. The final rule became effective on August 14, 2026.

See FinCEN, Beneficial Ownership Information Reporting (updated Aug. 11, 2026).

Example: the seller represents that the target's shares are duly authorized and validly issued, among the other qualities the quoted representation lists, and were issued in accordance with all applicable laws.

The Stock is duly authorized, validly issued, fully paid, and nonassessable and was issued in accordance with all applicable laws.

See Stock Purchase Agreement § 3.2(d)(i) (Ex. 2.6), Nano-X Imaging Ltd. (filed Mar. 13, 2026).

An overissue is the purported issuance of shares beyond the number of a class or series the corporation may issue under § 161, or of a class or series the certificate of incorporation does not authorize; putative stock includes shares, including shares issued on exercise of options, rights, warrants or convertible securities created through a defective act, that would be valid but for a failure of authorization or that the board cannot determine to be valid.

(3) “Overissue” means the purported issuance of: a. Shares of capital stock of a class or series in excess of the number of shares of such class or series the corporation has the power to issue under § 161 of this title at the time of such issuance; or b. Shares of any class or series of capital stock that is not then authorized for issuance by the certificate of incorporation of the corporation; (4) “Putative stock” means the shares of any class or series of capital stock of the corporation (including shares issued upon exercise of options, rights, warrants or other securities convertible into shares of capital stock of the corporation, or interests with respect thereto that were created or issued pursuant to a defective corporate act) that: a. But for any failure of authorization, would constitute valid stock; or b. Cannot be determined by the board of directors to be valid stock;

See 8 Del. C. § 204(h)(3)-(4) (2026).

Putative stock is not void or voidable solely for a failure of authorization if it is ratified under § 204 or validated by the Court of Chancery under § 205.

(a) Subject to subsection (f) of this section, no defective corporate act or putative stock shall be void or voidable solely as a result of a failure of authorization if ratified as provided in this section or validated by the Court of Chancery in a proceeding brought under § 205 of this title.

See 8 Del. C. § 204(a) (2026).

The Court of Chancery may approve a stock ledger that includes ratified or validated stock, and may declare putative shares valid or require the corporation to issue valid shares in their place.

(5) Approve a stock ledger for the corporation that includes any stock ratified or validated in accordance with this section or with § 204 of this title; (6) Declare that shares of putative stock are shares of valid stock or require a corporation to issue and deliver shares of valid stock in place of any shares of putative stock; (7) Order that a meeting of holders of valid stock or putative stock be held and exercise the powers provided to the Court under § 227 of this title with respect to such a meeting;

See 8 Del. C. § 205(b)(5)-(7) (2026).

Practitioner view: the Court of Chancery will not rubber-stamp § 205 applications and considers whether relief is necessary and an appropriate use of its power.

The court has indicated that it will not rubber-stamp Section 205 applications but instead will give serious consideration to whether granting such relief is necessary and an appropriate use of the court’s power under the statute.

See Skadden, Arps, Slate, Meagher & Flom LLP, Sections 204 and 205 of Delaware Corporation Law (May 2017) (accessed Oct. 5, 2026).

Ratification under § 204 and validation under § 205 are not the exclusive means of ratifying or validating an issuance of stock, including putative stock, and their absence does not of itself affect the validity of stock properly ratified under common law or otherwise.

(i) Ratification under this section or validation under § 205 of this title shall not be deemed to be the exclusive means of ratifying or validating any act or transaction taken by or on behalf of the corporation, including any defective corporate act, or any issuance of stock, including any putative stock, or of adopting or endorsing any act or transaction taken by or in the name of the corporation prior to the commencement of its existence, and the absence or failure of ratification in accordance with either this section or validation under § 205 of this title shall not, of itself, affect the validity or effectiveness of any act or transaction or the issuance of any stock properly ratified under common law or otherwise, nor shall it create a presumption that any such act or transaction is or was a defective corporate act or that such stock is void or voidable.

See 8 Del. C. § 204(i) (2026).

The directors may issue additional shares only up to the amount authorized in the certificate of incorporation.

The directors may, at any time and from time to time, if all of the shares of capital stock which the corporation is authorized by its certificate of incorporation to issue have not been issued, subscribed for, or otherwise committed to be issued, issue or take subscriptions for additional shares of its capital stock up to the amount authorized in its certificate of incorporation.

See 8 Del. C. § 161 (2026).

A transfer or ownership restriction may be imposed by the certificate of incorporation, the bylaws or an agreement among security holders or with the corporation, but it binds securities issued before its adoption only if their holders are parties to an agreement or voted for it.

(b) A restriction on the transfer or registration of transfer of securities of a corporation, or on the amount of a corporation’s securities that may be owned by any person or group of persons, may be imposed by the certificate of incorporation or by the bylaws or by an agreement among any number of security holders or among such holders and the corporation. No restrictions so imposed shall be binding with respect to securities issued prior to the adoption of the restriction unless the holders of the securities are parties to an agreement or voted in favor of the restriction.

See 8 Del. C. § 202(b) (2026).

A permitted transfer restriction not noted conspicuously on the certificate, or contained in the notice for uncertificated shares, is ineffective except against a person with actual knowledge of it.

Unless noted conspicuously on the certificate or certificates representing the security or securities so restricted or, in the case of uncertificated shares, contained in the notice or notices given pursuant to § 151(f) of this title, a restriction, even though permitted by this section, is ineffective except against a person with actual knowledge of the restriction.

See 8 Del. C. § 202(a) (2026).

Example: a filed stock purchase agreement requires a schedule of each target company's authorized and issued and outstanding equity and represents that, except as described on that schedule, no equity interest is outstanding and no existing option obliges a target company to issue or transfer equity.

3.3 Capitalization. The “Capitalization Schedule” attached hereto as Schedule 3.3 sets forth a true, correct and complete list, with respect to each Company Group Member, of (a) its total authorized Equity Interests and (b) all of the issued and outstanding Equity Interests thereof. The Equity Interests set forth on the Capitalization Schedule constitute all of the authorized, issued and outstanding Equity Interests of each of the Company Group Members, and except as described on the Capitalization Schedule, there are no Equity Interests of any Company Group Member outstanding on the Closing Date, and there is no existing Option obligating any Company Group Member to issue, sell, transfer or otherwise dispose of, or cause to be issued, sold, transferred or otherwise disposed of, any Equity Interests in any Company Group Member.

See Stock Purchase Agreement § 3.3 (Ex. 2.1), Acacia Research Corp., Current Report (Form 8-K) (filed Oct. 21, 2024).

The Delaware Supreme Court held that stock issued without authority of law is void and a nullity.

Stock issued without authority of law is void and a nullity.

See Staar Surgical Co. v. Waggoner, 588 A.2d 1130 (Del. 1991).

A permitted transfer restriction includes one that obliges the holder to offer the corporation, other holders or another person a prior opportunity, exercisable within a reasonable time, to acquire the restricted securities.

(c) A restriction on the transfer or registration of transfer of securities of a corporation or on the amount of such securities that may be owned by any person or group of persons is permitted by this section if it: (1) Obligates the holder of the restricted securities to offer to the corporation or to any other holders of securities of the corporation or to any other person or to any combination of the foregoing, a prior opportunity, to be exercised within a reasonable time, to acquire the restricted securities; or

See 8 Del. C. § 202(c)(1) (2026).

No stockholder has a preemptive right to subscribe to an additional issue of stock or to securities convertible into stock unless, and only to the extent, the certificate of incorporation expressly grants that right.

No stockholder shall have any preemptive right to subscribe to an additional issue of stock or to any security convertible into such stock unless, and except to the extent that, such right is expressly granted to such stockholder in the certificate of incorporation.

See 8 Del. C. § 102(b)(3) (2026).

Under Delaware's Article 9, investment property means a security, whether certificated or uncertificated, a security entitlement, a securities account, a commodity contract or a commodity account.

(49) “Investment property” means a security, whether certificated or uncertificated, security entitlement, securities account, commodity contract, or commodity account.

See 6 Del. C. § 9-102(a)(49) (2026).

A security interest in investment property, among other listed collateral, may be perfected by filing.

(a) Perfection by filing permitted. — A security interest in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, instruments, investment property, or negotiable documents may be perfected by filing.

See 6 Del. C. § 9-312(a) (2026).

A security interest in investment property, among other listed collateral, may be perfected by control of the collateral under the sections the statute lists.

(a) Perfection by control. — A security interest in controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment property, or letter-of-credit rights may be perfected by control of the collateral under Section 7-106, 9-104, 9-105A, 9-106, 9-107, or 9-107A.

See 6 Del. C. § 9-314(a) (2026).

A financing statement is sufficient only if it names the debtor and the secured party or its representative and indicates the collateral it covers.

(a) Sufficiency of financing statement. — Subject to subsection (b), a financing statement is sufficient only if it: (1) provides the name of the debtor; (2) provides the name of the secured party or a representative of the secured party; and (3) indicates the collateral covered by the financing statement.

See 6 Del. C. § 9-502(a) (2026).

To ratify a defective corporate act, the board adopts resolutions stating the act, its date, the number and type of any putative shares issued and their purported issue dates, the nature of the failure of authorization, and the board's approval of the ratification.

(b) (1) In order to ratify 1 or more defective corporate acts pursuant to this section (other than the ratification of an election of the initial board of directors pursuant to paragraph (b)(2) of this section), the board of directors of the corporation shall adopt resolutions stating: (A) The defective corporate act or acts to be ratified; (B) The date of each defective corporate act or acts; (C) If such defective corporate act or acts involved the issuance of shares of putative stock, the number and type of shares of putative stock issued and the date or dates upon which such putative shares were purported to have been issued; (D) The nature of the failure of authorization in respect of each defective corporate act to be ratified; and (E) That the board of directors approves the ratification of the defective corporate act or acts.

See 8 Del. C. § 204(b)(1) (2026).

A ratified defective corporate act must be submitted to stockholders for approval unless, among other exceptions, no statute, charter or bylaw provision, or plan or agreement would have required stockholder approval of the act and the act did not result from a failure to comply with § 203.

(c) Each defective corporate act ratified pursuant to paragraph (b)(1) of this section shall be submitted to stockholders for approval as provided in subsection (d) of this section, unless: (1) (A) No other provision of this title, and no provision of the certificate of incorporation or bylaws of the corporation, or of any plan or agreement to which the corporation is a party, would have required stockholder approval of such defective corporate act to be ratified, either at the time of such defective corporate act or at the time the board of directors adopts the resolutions ratifying such defective corporate act pursuant to paragraph (b)(1) of this section; and (B) Such defective corporate act did not result from a failure to comply with § 203 of this title; or

See 8 Del. C. § 204(c)(1) (2026).

Shares of putative stock as of the board's ratifying resolutions are not entitled to vote and are not counted for quorum purposes in any vote to ratify a defective corporate act.

(5) Shares of putative stock as of the adoption by the board of directors of resolutions pursuant to paragraph (b)(1) of this section (and without giving effect to any ratification that becomes effective after such adoption) shall neither be entitled to vote nor counted for quorum purposes in any vote to ratify any defective corporate act.

See 8 Del. C. § 204(d)(5) (2026).

The notice of a stockholder meeting to approve a ratification must include the board's ratifying resolutions or the required information, and a statement that any claim challenging the ratified act or putative stock, or asking the Court of Chancery to deny or condition the ratification's effect, must be brought within 120 days from the validation effective time.

(3) The notice shall contain a copy of the resolutions adopted by the board of directors pursuant to paragraph (b)(1) of this section or the information required by paragraphs (b)(1)(A) through (E) of this section and a statement that any claim that the defective corporate act or putative stock ratified hereunder is void or voidable due to the failure of authorization, or that the Court of Chancery should declare in its discretion that a ratification in accordance with this section not be effective or be effective only on certain conditions must be brought within 120 days from the applicable validation effective time.

See 8 Del. C. § 204(d)(3) (2026).

The § 204(g) notice of a ratification must include the ratifying resolutions or the required information, and a statement that any such challenge must be brought within 120 days from the later of the validation effective time or the time the notice is given.

The notice shall contain a copy of the resolutions adopted pursuant to subsection (b) of this section or the information specified in paragraphs (b)(1)(A) through (E) or paragraphs (b)(2)(A) through (C) of this section, as applicable, and a statement that any claim that the defective corporate act or putative stock ratified hereunder is void or voidable due to the failure of authorization, or that the Court of Chancery should declare in its discretion that a ratification in accordance with this section not be effective or be effective only on certain conditions must be brought within 120 days from the later of the validation effective time or the time at which the notice required by this subsection is given.

See 8 Del. C. § 204(g) (2026).

If a ratified defective act would have required a filed certificate and that certificate needs a change to give effect to the act, or was never filed, the corporation must file a certificate of validation under § 103 in place of the certificate otherwise required.

(e) (1) If a defective corporate act ratified pursuant to this section would have required under any other section of this title the filing of a certificate in accordance with § 103 of this title, and either (i) such certificate requires any change to give effect to the defective corporate act in accordance with this section (including a change to the date and time of the effectiveness of such certificate) or (ii) a certificate was not previously filed under § 103 of this title in respect of the defective corporate act, then, in lieu of filing the certificate otherwise required by this title, the corporation shall file a certificate of validation with respect to such defective corporate act in accordance with § 103 of this title.

See 8 Del. C. § 204(e)(1) (2026).

Practitioner account: § 204 is a self-help statute under which ratification can be accomplished without court involvement.

Section 204 is a self-help statute, i.e., ratification can be accomplished without court involvement.

See Skadden, Arps, Slate, Meagher & Flom LLP, Sections 204 and 205 of Delaware Corporation Law (May 2017) (accessed Oct. 5, 2026).

Practitioner recommendation: parties should consider ratifying the act under § 204 before seeking § 205 relief from the court.

Parties should consider attempting to engage in self-help facilitated by Section 204 by ratifying the corporate act at issue before seeking Section 205 relief from the court.

See Skadden, Arps, Slate, Meagher & Flom LLP, Sections 204 and 205 of Delaware Corporation Law (May 2017) (accessed Oct. 5, 2026).

Example: the agreement's Fundamental Representations include the Section 3.3 capitalization representation, along with organization, authorization, title to the purchased shares, subsidiaries, taxes and brokerage representations.

“Fundamental Representations” means the representations and warranties contained in Section 2.1 (Organization and Standing), Section 2.2 (Authorization), clauses (iii) and (z) of Section 2.3 (No Violation (Constituent Documents)), Section 2.4 (Purchased Shares), Section 2.6 (Brokerage), Section 3.1 (Organization and Power), Section 3.2 (Subsidiaries), Section 3.3 (Capitalization), clause (iii) and (3) of Section 3.5 (No Violation (Constituent Documents)), Section 3.11 (Taxes) and Section 3.15 (Brokerage).

See Stock Purchase Agreement § 8.1 (Ex. 2.1), Acacia Research Corp., Current Report (Form 8-K) (filed Oct. 21, 2024).

Example: for claims subject to the insurance retention, and to the extent funds remain in the indemnity escrow, the sellers fund 100 percent of the retention solely from the indemnity escrow for breaches of the Fundamental Representations or Seller Taxes claims, compared with the second 50 percent for other claims, of which the purchaser funds the first 50 percent.

(i) with respect to any Claims that are subject to the retention under the R&W Insurance Policy, in each case to the extent there are any funds in the Indemnity Escrow Account, (A) subject to clause (B) below, with respect to Claims other than Claims arising out of or relating to breaches of any of the Fundamental Representations or Claims related to any Seller Taxes, (1) the second 50% of the retention amount payable to the insurer under the R&W Insurance Policy shall be funded by the Sellers solely by disbursement of funds in the Indemnity Escrow Account and (2) the first 50% of the retention amount payable to the insurer under the R&W Insurance Policy shall be funded by the Purchaser, and (B) with respect to Claims arising out of or relating to breaches of any of the Fundamental Representations or Claims related to any Seller Taxes, 100% of the retention amount payable to the insurer under the R&W Insurance Policy shall be funded by the Sellers solely by disbursement of funds in the Indemnity Escrow Account

See Stock Purchase Agreement § 6.3 (Ex. 2.1), Acacia Research Corp., Current Report (Form 8-K) (filed Oct. 21, 2024).

Ohio declined to expand the traditional exceptions and held that an asset buyer is not liable for the predecessor's contractual liabilities unless it agrees to assume them, the transaction is a de facto consolidation or merger, the buyer is merely a continuation of the seller, or the transaction is entered into fraudulently to escape liability.

For these reasons, we decline to expand the traditional exceptions to the general rule of nonliability of successor corporations, and hold that a corporation that purchases the assets of another corporation is not liable for the contractual liabilities of its predecessor corporation unless (1) the buyer expressly or impliedly agrees to assume such liability; (2) the transaction amounts to a de facto consolidation or merger; (3) the buyer corporation is merely a continuation of the seller corporation; or (4) the transaction is entered into fraudulently for the purpose of escaping liability.

See Welco Indus., Inc. v. Applied Cos., 67 Ohio St. 3d 344, 349 (1993).

Under Schumacher, as Semenetz describes it, the exceptions arise where the successor expressly or impliedly assumes the predecessor's tort liability, there is a consolidation or merger, the buyer is a mere continuation of the seller, or the transaction is entered into fraudulently to escape the obligations.

These exceptions arise where a successor corporation “expressly or impliedly assume[s] [its] predecessor’s tort liability”; or “there [is] a consolidation or merger of seller and purchaser”; or “the purchasing corporation [is] a mere continuation of the selling corporation”; or “the transaction is entered into fraudulently to escape such obligations” (Schumacher, 59 NY2d at 245).

See Semenetz v. Sherling & Walden, Inc., 7 N.Y.3d 194, 198 (2006).

In New York, a corporation that purchases another corporation's assets is not liable for the seller's torts, subject to four exceptions.

A corporation that purchases another corporation’s assets is not liable for the seller’s torts, subject to four exceptions outlined in Schumacher v Richards Shear Co. (59 NY2d 239 [1983]).

See Semenetz v. Sherling & Walden, Inc., 7 N.Y.3d 194, 196 (2006).

New Jersey states the general rule that an acquiring company is not liable for the seller's debts and liabilities merely because it succeeded to the seller's assets, subject traditionally to four exceptions: assumption, actual or de facto consolidation or merger, mere continuation, and a fraudulent transaction to escape liability.

The general rule of corporate-successor liability is that when a company sells its assets to another company, the acquiring company is not liable for the debts and liabilities of the selling company simply because it has succeeded to the ownership of the assets of the seller. Traditionally, there have been only four exceptions: (1) the successor expressly or impliedly assumes the predecessor’s liabilities; (2) there is an actual or de facto consolidation or merger of the seller and the purchaser; (3) the purchasing company is a mere continuation of the seller; or (4) the transaction is entered into fraudulently to escape liability.

See Lefever v. K.P. Hovnanian Enters., Inc., 160 N.J. 307, 734 A.2d 290 (1999).

In Ohio, the mere-continuation exception rests on continuation of the corporate entity, not the business operation, after the transaction, as when one corporation sells its assets to another owned by the same people.

We have held that the basis of this theory is the continuation of the corporate entity, not the business operation, after the transaction. Flaugher, supra. Such would be the case when “one corporation sells its assets to another corporation with the same people owning both corporations. Thus, the acquiring corporation is just a new hat for, or reincarnation of, the acquired corporation. This is actually a reorganization.”

See Welco Indus., Inc. v. Applied Cos., 67 Ohio St. 3d 344, 350 (1993).

Under California law, a party that acquires a manufacturing business and continues the output of its line, in the circumstances the court described, assumes strict tort liability for defects in units of the same line that the predecessor made and distributed.

We therefore conclude that a party which acquires a manufacturing business and continues the output of its line of products under the circumstances here presented assumes strict tort liability for defects in units of the same product line previously manufactured and distributed by the entity from which the business was acquired.

See Ray v. Alad Corp., 19 Cal. 3d 22, 34 (1977).

The New Jersey Supreme Court described California as the jurisdiction that initiated the product-line exception and acknowledged that California has declined to apply it to a product line acquired through a bankruptcy sale.

We acknowledge that California, the jurisdiction that initiated the product-line exception, has declined to apply the exception to the acquisition of a product line through a bankruptcy sale.

See Lefever v. K.P. Hovnanian Enters., Inc., 160 N.J. 307, 734 A.2d 290 (1999).

The California Court of Appeal declined to expand the product line exception beyond product liability.

As did those two courts before us, we decline to expand the product line exception beyond the arena of product liability.

See Franklin v. USX Corp., 87 Cal. App. 4th 615 (2001).

The Ohio Supreme Court has expressly declined to adopt the product line theory.

This court has expressly declined to adopt the product line theory in Ohio.

See Welco Indus., Inc. v. Applied Cos., 67 Ohio St. 3d 344, 347 (1993).

The New York Court of Appeals rejected the product line exception.

For the reasons that follow, we reject the “product line” exception.

See Semenetz v. Sherling & Walden, Inc., 7 N.Y.3d 194, 196 (2006).

New Jersey held that a corporation that acquires all or substantially all of another's manufacturing assets, even for cash, and undertakes essentially the same manufacturing operation is strictly liable for defects in units of the same product line, even those the seller or its predecessor made.

Rather, we hold that where one corporation acquires all or substantially all the manufacturing assets of another corporation, even if exclusively for cash, and undertakes essentially the same manufacturing operation as the selling corporation, the purchasing corporation is strictly liable for injuries caused by defects in units of the same product line, even if previously manufactured and distributed by the selling corporation or its predecessor.

See Ramirez v. Amsted Indus., Inc., 86 N.J. 332 (1981).

The New Jersey Supreme Court rejected, as unfounded, the concern that applying the product-line exception to a successor that itself bought assets at a bankruptcy sale is unfair to a purchaser contemplating a purchase free and clear of predecessor liability.

We share the instinctive reaction of those who hesitate to apply the product-line exception to a successor at a bankruptcy sale. At first glance, to apply the doctrine to one who could be contemplating the purchase of assets free and clear of any predecessor liability seems unfair. That concern turns out to be unfounded.

See Lefever v. K.P. Hovnanian Enters., Inc., 160 N.J. 307, 734 A.2d 290 (1999).

New Jersey, along with several other jurisdictions, has adopted a product-line exception under which a corporation that buys a substantial part of a manufacturer's assets and continues to market the same product line may be strictly liable in tort for defects in the predecessor's products.

New Jersey, along with several other jurisdictions, has adopted a product-line exception to the general rule. Under that doctrine, by purchasing a substantial part of the manufacturer’s assets and continuing to market goods in the same product line, a corporation may be exposed to strict liability in tort for defects in the predecessor’s products.

See Lefever v. K.P. Hovnanian Enters., Inc., 160 N.J. 307, 734 A.2d 290 (1999).

Practitioner view: a seller that is dissolved or lacks resources to satisfy its retained liabilities raises the buyer's successor-liability risk.

When a seller has been dissolved or otherwise has insufficient resources to satisfy its retained liabilities (including contingencies) the buyer will face a greater risk of successor liability.

See Samuel D. Hodson, Successor Liability Risks in Asset Purchase Agreements, Taft Stettinius & Hollister LLP (June 26, 2020).

Example: the buyer will not assume or be liable for any Excluded Liabilities, and the seller undertakes to perform and discharge them.

The Purchaser will not assume or be liable for or in any way undertake to pay, perform, satisfy or discharge any Excluded Liabilities. The Company shall timely perform, satisfy and discharge in accordance with their respective terms all Excluded Liabilities.

See Asset Purchase Agreement § 2.4 (Ex. 2.1), First Watch Restaurant Group, Inc., Current Report (Form 8-K) (filed Nov. 12, 2024).

Example: the buyer does not assume, become responsible for or incur any Excluded Liabilities, except as the agreement expressly provides.

Except as explicitly and expressly set forth in this Agreement, Buyer shall not, by the execution and performance of this Agreement or otherwise, assume, become responsible for or incur, any Excluded Liabilities.

See Asset Purchase Agreement § 1.07 (Ex. 2.1), Intrepid Potash, Inc., Current Report (Form 8-K) (filed Apr. 2, 2026).

Practitioner view: the seller's creditors are not parties to the asset purchase agreement and are not bound by it.

A seller’s creditors are not parties to the asset purchase agreement and are not bound by it.

See Samuel D. Hodson, Successor Liability Risks in Asset Purchase Agreements, Taft Stettinius & Hollister LLP (June 26, 2020).

Example: after closing, the seller indemnifies the buyer parties against losses arising from, among other things, any Excluded Liabilities.

Subject to the other terms and conditions of this Article VIII, from and after the Closing, Seller shall indemnify each Buyer Party against, and shall hold each Buyer Party harmless from and against, any and all Losses incurred or sustained by, or imposed upon, such Buyer Party based upon, arising out of, with respect to: (a) any inaccuracy in or breach of any of the representations or warranties of Seller contained in Article III of this Agreement; (b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement; (c) the Diversion Liabilities; (d) all Seller Taxes (taking into account, and without duplication of, such Production Taxes effectively borne by Seller as a result of (x) the payments made by Seller pursuant to Section 1.03(b)(ii) and (y) any payments made from one Party to the other in respect of Asset Taxes pursuant to Section 6.07); or (e) any Excluded Liabilities.

See Asset Purchase Agreement § 8.02 (Ex. 2.1), Intrepid Potash, Inc., Current Report (Form 8-K) (filed Apr. 2, 2026).

Practitioner recommendation: where feasible, require the seller to remain in existence until the limitations periods expire and to keep insurance for current and pre-closing liabilities.

When feasible, buyers should require sellers to remain in existence until applicable limitations periods expire and maintain insurance coverage for current and pre-closing liabilities.

See Samuel D. Hodson, Successor Liability Risks in Asset Purchase Agreements, Taft Stettinius & Hollister LLP (June 26, 2020).

In Ohio, a de facto merger is a merger in fact without an official declaration; its hallmarks include continuation of the business and personnel, continuity of shareholders from a sale of assets for stock, rapid dissolution of the predecessor, and the buyer's assumption of the liabilities ordinarily necessary to continue the business.

A de facto merger is a merger in fact without an official declaration of such. The hallmarks of a de facto merger include (1) the continuation of the previous business activity and corporate personnel, (2) a continuity of shareholders resulting from a sale of assets in exchange for stock, (3) the immediate or rapid dissolution of the predecessor corporation, and (4) the assumption by the purchasing corporation of all liabilities and obligations ordinarily necessary to continue the predecessor’s business operations.

See Welco Indus., Inc. v. Applied Cos., 67 Ohio St. 3d 344, 349 (1993).

The forklift's manufacturer's assets were acquired by an intermediary company, which later went into bankruptcy; the bankruptcy trustee then conveyed substantially all of the intermediary's assets to the defendant successor.

The Lull Engineering Corporation, Inc., whom we shall refer to as “Lull I,” had manufactured and distributed the forklift. Through a series of transfers, Lull I’s assets were acquired in 1986 by Lull Corporation (“Lull II”). In 1992, Lull II went into bankruptcy. In November 1993, the trustee in the bankruptcy proceedings conveyed to Lull Industries Inc. (“Lull III”), interests in substantially all of Lull II’s assets.

See Lefever v. K.P. Hovnanian Enters., Inc., 160 N.J. 307, 734 A.2d 290 (1999).

In the circumstances of the case, the New Jersey Supreme Court did not consider it unfair to impose liability on the successor manufacturers of the forklift.

In these circumstances, we do not consider it unfair to impose liability on the successor manufacturers of the Lull forklift.

See Lefever v. K.P. Hovnanian Enters., Inc., 160 N.J. 307, 734 A.2d 290 (1999).

A disclaimer of predecessor liabilities in an asset purchase agreement is ineffective to insulate the buyer from successor liability when other principles of law require imposing liability.

such disclaimers are ineffective in insulating the buyer from successor liability when other principles of law require the imposition of liability. See Ramirez, supra, 86 N.J. at 344, 431 A.2d 811 (discussing effect of disclaimer clauses under “mere continuation” theory). Congress appears to have recognized the foregoing limitation on the scope of a bankruptcy discharge by expressly providing that in the ease of debtors liable for personal injury due to asbestos-containing products, bankruptcy courts shall have the authority to insulate a successor from liability “with respect to any claim or *320 demand made against such entity by reason of its becoming such a transferee or successor.”

See Lefever v. K.P. Hovnanian Enters., Inc., 160 N.J. 307, 734 A.2d 290 (1999).

When a merger becomes effective, the constituent corporations' property vests in the surviving corporation, creditors' rights and liens are preserved, and all debts, liabilities and duties of the constituent corporations attach to the surviving corporation and may be enforced against it.

(a) When any merger or consolidation shall have become effective under this chapter, for all purposes of the laws of this State the separate existence of all the constituent corporations, or of all such constituent corporations except the one into which the other or others of such constituent corporations have been merged, as the case may be, shall cease and the constituent corporations shall become a new corporation, or be merged into 1 of such corporations, as the case may be, possessing all the rights, privileges, powers and franchises as well of a public as of a private nature, and being subject to all the restrictions, disabilities and duties of each of such corporations so merged or consolidated; and all and singular, the rights, privileges, powers and franchises of each of said corporations, and all property, real, personal and mixed, and all debts due to any of said constituent corporations on whatever account, as well for stock subscriptions as all other things in action or belonging to each of such corporations shall be vested in the corporation surviving or resulting from such merger or consolidation; and all property, rights, privileges, powers and franchises, and all and every other interest shall be thereafter as effectually the property of the surviving or resulting corporation as they were of the several and respective constituent corporations, and the title to any real estate vested by deed or otherwise, under the laws of this State, in any of such constituent corporations, shall not revert or be in any way impaired by reason of this chapter; but all rights of creditors and all liens upon any property of any of said constituent corporations shall be preserved unimpaired, and all debts, liabilities and duties of the respective constituent corporations shall thenceforth attach to said surviving or resulting corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it.

See 8 Del. C. § 259(a) (2026).

Practitioner view: the risk of unknown liabilities is lower in asset acquisitions than in merger or stock transactions, and the strongest defense is organized diligence.

While the risk of unknown liabilities is lower in asset acquisitions than in merger or stock transactions, the strongest defense is robust and organized diligence.

See Samuel D. Hodson, Successor Liability Risks in Asset Purchase Agreements, Taft Stettinius & Hollister LLP (June 26, 2020).

The Delaware Superior Court stated that a buyer of assets generally is not liable for a seller's debts or tortious conduct, except where the buyer assumed the liability, there is a de facto merger or consolidation, the buyer is a mere continuation of the seller, or there was fraud in the transaction.

As a general rule, a buyer of assets is not liable for a seller’s debts or tortious conduct.48 However, this general rule does not apply where (i) the buyer assumed the seller’s liability; (ii) there is a de facto merger or consolidation; (iii) the buyer is a mere continuation of the seller under a different name; or (iv) there was fraud in the transaction.

See Omnicare Pharmacy of Fla., LLC v. Lake City Nursing, LLC, C.A. No. N25C-01-233 KMM (Del. Super. Ct. Aug. 31, 2026).

The court justified successor strict liability by the virtual destruction of the plaintiff's remedies against the original manufacturer caused by the acquisition, the successor's ability to assume the risk-spreading role, and the fairness of requiring the successor that enjoys the original manufacturer's goodwill to bear responsibility for defective products.

Justification for imposing strict liability upon a successor to a manufacturer under the circumstances here presented rests upon (1) the virtual destruction of the plaintiff’s remedies against the original manufacturer caused by the successor’s acquisition of the business, (2) the successor’s ability to assume the original manufacturer’s risk-spreading role, and (3) the fairness of requiring the successor to assume a responsibility for defective products that was a burden necessarily attached to the original manufacturer’s good will being enjoyed by the successor in the continued operation of the business.

See Ray v. Alad Corp., 19 Cal. 3d 22 (1977).