Before August 1, 2022, Delaware General Corporation Law Section 102(b)(7) provided that a corporation's certificate of incorporation may contain a provision eliminating or limiting the personal liability of only directors to the corporation or its shareholders for monetary damages for a breach of the fiduciary duty of care. As of August 1, 2022, amended Section 102(b)(7) allows a corporation's certificate of incorporation to include a provision exculpating Section 3114(b) officers (including the president, CEO, and CFO) for a breach of the duty of care. The amendment comes with key exceptions which provide for protections narrower than those available to directors. The amendment eliminates monetary liability for the breach but does not preclude the court from issuing an injunction to provide relief for the underlying breach itself. Additionally, the exculpation is unavailable to officers for claims brought by or in the right of the corporation, such as derivative claims brought by stockholders. Exculpation is not automatic, nor does it apply retroactively for actions or omissions before August 1, 2022. Existing Delaware corporations (formed before August 1, 2022) may implement exculpation for officers through an amendment to their corporation’s certificate of incorporation. Newly formed corporations may adopt a charter that proactively includes the provision for officers’ exculpation.
For more information on this amendment or to get help in implementing officer exculpation in your charter and corporation, please email .
