Corporate Services of Nevada

LEGAL ADVANTAGES; A COMPARISON WITH DELAWARE (continued)
Not intended to be legal advice, for discussion purposes only.

9. Amendment to Articles / Certificate of Incorporation
Both Nevada and Delaware law provide that, after receipt of payment for stock, or for non-stock corporations,
approval of proposed amendments to a corporation’s articles (in Nevada) or certificate (in Delaware) of incorporation requires the affirmative vote of holders of a majority of all outstanding shares entitled to vote, with each such stockholder being entitled to one vote for each share held. See Nev. Rev. Stat. § 78.390(1)(b); Del. Code Ann. tit. viii, § 242(b)(1).

Holders of the outstanding shares of a particular class are entitled to vote as a class on a proposed amendment if the amendment would alter or change the power, preferences, or special rights of one or more series of any class so as to affect them adversely.   Nev. Rev. Stat. § 78.385; Del. Code Ann. tit. viii, § 242(a)(3)-(5). Under Nevada law, but not under Delaware law, an amendment that would adversely alter or change any preference or other right given to any class or series of outstanding shares does not have to be approved by the vote of the holders of shares representing a majority of the voting power of each class or series whose preference or rights are adversely affected by the amendment if the articles of incorporation specifically deny the right to vote on such an amendment. Nev. Rev. Stat. § 78.390(2).

10. Actions by Written Consent of Stockholders
Nevada and Delaware statutes provide that, unless the articles (in Nevada) or certificate (in Delaware) of incorporation or the bylaws (in Nevada) provide otherwise, any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if the holders of outstanding stock having at least the minimum number of votes that would be necessary to authorize or take such action at a meeting consents to the action in writing.   Nev. Rev. Stat. § 78.320; Del. Code Ann. tit. viii, § 228(a).   In addition, Delaware law requires the corporation to give prompt notice of the taking of corporate action without a meeting by less than unanimous written consent to those stockholders who did not consent in writing. Del. Code Ann. tit. viii, § 228(e).

11. Stockholder Vote for Mergers and Other Corporate Reorganizations
In general, both jurisdictions provide that the merger of a corporation requires the approval of a majority of outstanding shares entitled to vote as well as approval of the board of directors. See Nev. Rev. Stat. § 92A.120; Del Code Ann. tit. viii, § 251. Both jurisdictions generally provide that the surviving corporation in a merger does not need to obtain stockholder approval if the articles or certificate, as applicable, of incorporation do not change as a result of the merger, each stockholder of the surviving corporation will hold the same number of shares after the merger, and the surviving corporation issues no more than 20% of its voting stock in connection with the merger. Nev. Rev. Stat. § 92A.130; Del Code Ann. tit. viii, § 251(f). Nevada also requires that the shares of each stockholder in the surviving corporation have the same relative rights, preferences, limitations, and designations after the merger as they did prior to the merger. Nev. Rev. Stat. § 92A.130(1)(b).

In addition, both jurisdictions provide that a sale of all of a corporation’s assets requires board approval and the approval of a majority of outstanding shares entitled to vote. See Nev. Rev. Stat. § 78.565; Del Code Ann. Tit. viii, § 271. Although Delaware requires the same majority stockholder approval for a sale of substantially all of a corporation’s assets, Nevada does not have a parallel requirement. Although it is unlikely that a Nevada court would interpret Nev. Rev. Stat. § 78.565 literally to permit an unapproved sale of all but a token amount of assets, it is likely that many sales that would require stockholder approval under Delaware law would not require such approval under Nevada law.