DOVER, Del. — A bipartisan group of Delaware lawmakers introduced legislation Monday aimed at preserving the state’s corporate legal framework amid concerns from investors, managers, and legal advisors.
According to a release from Sarah Fulton, the Director of Communications for the Delaware Senate Majority Caucus, the goal of Senate Bill 21 is to reinforce Delaware’s status as a leading corporate and legal hub by providing clarity on the legal protections available to controlling stockholders in corporate transactions. The bill was introduced in response to concerns raised following several high-profile reincorporation announcements in January.
The legislation clarifies that controlling stockholders can secure legal protections for transactions if they obtain approval from unconflicted directors or stockholders. It also defines criteria for determining whether a director is conflicted and whether a stockholder qualifies as a controller. Additionally, SB 21 refocuses stockholder books and records requests on core corporate documents and streamlines summary proceedings.
Senate Majority Leader Bryan Townsend, Rep. Krista Griffith, Senate Minority Whip Brian Pettyjohn, and House Minority Leader Tim Dukes, the bill’s prime sponsors, issued a joint statement emphasizing Delaware’s commitment to balanced and responsive corporate laws.
“This legislation restores Delaware law to what it was historically known for being: balanced as to the relevant stakeholders, protective of stockholder rights and interests, workable for corporate leaders, and empowering of directors who act in good faith,” the lawmakers stated. “Uncertain standards or barriers to responsible options that cause widespread frustration among Delaware companies are not helpful to anyone, especially stockholders.”
In addition to SB 21, lawmakers introduced Senate Concurrent Resolution 17, which calls on the Council of the Corporation Law Section of the Delaware State Bar Association to present a report with recommendations on attorney fee awards by March 31. The resolution seeks to ensure that legal fees remain protective of stockholders without imposing excessive costs on companies.
Gov. Matt Meyer voiced support for the legislation, citing Delaware’s continued prominence in corporate law.
“Delaware is the world’s preeminent center of corporate jurisprudence,” Meyer said. “We will protect our reputation and continue Delaware’s tradition of a balanced and measured approach. Clarity, predictability, and fairness remain the hallmark of our franchise.”
SB 21 has been assigned to the Senate Judiciary Committee, while SCR 17 awaits action by the full Senate.