The Delaware State Senate is scheduled to hold a committee hearing on March 12 at 2 pm (Eastern) on Senate Bill 21, which seeks to discourage public companies from reincorporating in other states by amending the Delaware General Corporation Law's provisions regarding transactions with controlling shareholders as well as the growing number of "books and records" requests by shareholders. The bill is opposed by public pension funds, the Council of Institutional Investors, and other shareholder advocates, who view the bill as an overaction to Tesla's move to reincorporate in Texas following adverse Delaware court decisions on the compensation for CEO Elon Musk. Other founder-led companies, such as Meta Platforms, also are considering leaving Delaware, according to news reports. On March 3, the Delaware State Bar Association's Corporation Law Council proposed revisions to SB 21, while shareholder lawyers have offered their own set of revisions. In addition, The New York Times reported that 21 corporate law firms plan to submit a letter in support of the legislation.
For more on the debate over this legislation, please see the following resources:
Chancery Daily resources on SB 21
Bloomberg Law, "Musk-Linked Corporate Law Rewrite Would Stymie Investor Scrutiny," March 10, 2025
Alston & Bird, "Delaware’s Corporations Law Council Weighs In on Proposed DGCL Amendments," March 7, 2025
Foley & Lardner, "SB21: Delaware Responds In The DExit Battle," March 6, 2025
Lathrop GPM, "Revisions To Delaware SB 21 Made Public After Initial Draft Criticized As Too Controller-Friendly," March 6, 2025
Professor Lucian Bebchuk, Harvard Law School, "Delaware: The Empire Strikes Back," March 4, 2025
The Society is putting together a working group on Delaware judicial and legislative developments. If you would like to participate in this group, please email me at tallen@societycorpgov.org.