General Automation Planning to Reincorporate in Delaware

General Automation Inc. said it will join the growing ranks of local companies that are reincorporating in Delaware to take advantage of that state’s liberal corporate laws.

The move, approved by shareholders at the Anaheim computer maker’s annual meeting Monday, is designed to take advantage of Delaware’s “modern, flexible corporation law,” which allows a company to provide key personnel with broader liability indemnification than is possible in California.

Delaware’s corporate laws allow shareholders to limit company directors’ personal liability in some types of lawsuits. Under California law, shareholders cannot vote to limit the directors’ liability for negligence.

“In California, the corporations code spells out in detail when officers can be indemnified,” said Jim Hamilton, general counsel for the company. He said Delaware’s codes, though in some ways similar, allow a company to indemnify its directors in more circumstances than in California, so more insurance coverage is available for a company’s key executives.

“Without director and officer liability insurance, it’s difficult to get good people to serve on (a company’s) board,” Hamilton said.

The company said that it will reincorporate under a newly created “corporate shell” in Delaware but that the merger will not change the company’s operation in Anaheim.