Delaware Law Article IX- CORPORATIONS
Here is a detailed summary of Article IX – Corporations from the Delaware Constitution:
📘 Delaware Constitution – Article IX: Corporations
This article governs the regulation, formation, and operation of corporations in Delaware — a state widely known for its business-friendly corporate laws and being the legal home of many U.S. companies.
Despite Delaware’s rich corporate law tradition, Article IX of the Delaware Constitution is short and foundational, and most detailed corporate governance rules are found in Delaware statutory law, especially the Delaware General Corporation Law (DGCL).
🔢 Key Sections of Article IX:
Section 1 – Special Acts Prohibited
Summary:
The General Assembly cannot create corporations by special laws.
All corporations must be formed under general laws.
✅ This ensures fairness and uniformity — corporations must follow standard procedures, not get special treatment from the legislature.
Section 2 – Corporate Powers Revocable
Summary:
Corporate powers, privileges, and franchises are subject to alteration, revocation, or repeal by the legislature.
✅ This gives the General Assembly oversight authority to ensure corporations act in the public interest.
Section 3 – State’s Interest in Corporate Property
Summary:
The State of Delaware retains an interest in corporate property and reserves the power to regulate and tax it.
✅ Reinforces the state’s right to oversee and tax corporate activities.
Section 4 – Banking Exception
Summary:
The General Assembly may create banking corporations by special acts, but such acts must be approved by a two-thirds vote in each house.
✅ Unlike other corporations, banks may be formed via special legislation, but it requires supermajority approval.
Section 5 – Liability of Stockholders
Summary:
Stockholders are not personally liable for corporate debts beyond their investment, unless otherwise specified by law.
✅ This confirms limited liability, a core principle of corporate law.
⚖️ Summary:
Article IX sets out constitutional principles for corporations in Delaware:
| Principle | Meaning |
|---|---|
| No special corporate laws | Corporations must be formed under general laws |
| Legislative oversight | Corporate charters can be altered or revoked by the legislature |
| Taxation allowed | State may tax and regulate corporate property |
| Banking exception | Special rules for bank charters, requiring 2/3 legislative approval |
| Limited liability | Investors aren’t personally liable beyond their investment |
📌 Note:
While Article IX outlines basic rules, the Delaware General Corporation Law (DGCL) provides detailed rules and is the governing authority for most corporate operations in Delaware.
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