On March 13, the Delaware Senate voted 20-0 (with one member absent) to approve legislation to create a safe harbor for board approval of transactions with controlling shareholders and to impose new limits on Section 220 "books and records" demands. The legislation, Senate Bill 21, was introduced by lawmakers in February amid growing concerns that Delaware companies were considering reincorporation in Texas or other jurisdictions. The bill, which reflected revisions suggested in early March by the Council of the Corporation Law Section of the Delaware State Bar Association, is scheduled to be considered by the Delaware House on March 19-20.
The bill is opposed by the Council of Institutional Investors, plaintiffs' lawyers, and other investor advocates. The website of the "Stop Delaware Senate Bill 21" campaign features a photo of Elon Musk with a chainsaw and asserts that the bill was written by Musk's lawyers after the Tesla CEO lost two Chancery Court rulings regarding board approval of his executive compensation package. Tesla reincorporated in Texas in 2024, and news reports have indicated that Meta and Dropbox also were considering leaving Delaware.
The Society is forming a working group on Delaware judicial and legislative developments. If you would like to participate in this group, please email Ted Allen.