On March 26, Delaware Governor Matt Meyer announced that he signed Senate Bill 21, which would amend the Delaware General Corporation Law's provisions relating to board approval of transactions with controlling shareholders and place new limits on Section 220 "books and records" actions by shareholders.
The bill cleared the Delaware House by a 32 to 7 vote, with two members absent, on March 25. The House rejected five proposed amendments, including one that would have required an opt-in vote by shareholders. (For more on the House debate over these amendments, please see this Delaware Public Media article.)
The bill was introduced in February amid growing concerns that Delaware companies were considering reincorporating in Texas, Nevada, or other jurisdictions. Simon Property Group, Dropbox, Tesla, and Pershing Square Capital Management are among the companies that have left Delaware or have announced plans to do so.
“Delaware is the best place in the world to incorporate your business, and Senate Bill 21 will help keep it that way, ensuring clarity and predictability, balancing the interests of stockholders and corporate boards,” Meyer said in a press release.
The bill was opposed by plaintiffs' lawyers and investor advocates, including the Council of Institutional Investors.
The Society will host a webinar on April 8 at 1 pm Eastern to discuss the impact of SB 21 on litigation between investors and Delaware companies. To register for this webinar and other Society programs, please click here.