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Introduction to the Law of Corporations: Cases and Materials

DGCL Sec. 242 - Amendments to Certificate

Like a constitution, a corporation's certificate of incorporation may be amended at any point in the future. It is not a "forever" contract.  A board of directors together with the corporation's stockholders can amend a certificate of incorporation. Section 242 outlines the procedures for amending a certificate.

There are two features of the amendment process that are worth pointing out. First, any amendment to a corporation's certificate of incorporation must be initiated by the corporation's board of directors and requires the board's assent. A certificate amendment may not be initiated by stockholders. A certificate may not be amended against the will of the board of directors. Second, any amendments recommended by the board of directors must be approved by a vote of a majority of the outstanding shares of the corporation. A certificate may not be amended against the will of the majority of the stockholders. These dual requirements can make the process of amending a certificate of incorporation difficult. Thus, the limitations placed on a board or a corporation's stockholders by the certificate of incorporation are effective constraints. 

Although any portion of the certificate may be amended, the most common amendment to certificates of incorporation involves increases to the number of authorized shares. Such amendments are usually, but not always, noncontroversial.