Proposed amendments to the Delaware General Corporations Law (DGCL) for 2014 aim to significantly streamline routine questions that often prove vexing for emerging growth companies and newly formed subsidiaries of larger companies.
It is a fact of life that people leave jobs. They move to other cities, whether for family or lifestyle. They quit for perceived greener pastures. They retire. Or they are hit by the proverbial bus. Forming a company under Delaware law historically has had a pitfall: a “sole incorporator” (often a paralegal) forms the initial company, one assumes promptly appoints one or more directors and then, one further assumes, immediately resigns.
But sometimes that paperwork is lost, overlooked (particularly if creating a new subsidiary for a larger company) or forgotten in the midst of workloads, or a company founder without the benefit of legal counsel did the incorporation and neglected to resign. An existential crisis involving numerous lawyers scratching their heads can ensue if the resignation paperwork does not exist and the original sole incorporator cannot be located or refuses to cooperate.