SB21 restores the balance: It once again provides predictability and clarity for directors, officers and stockholders – the hallmarks of Delaware law. Excessive, frivolous litigation, on the whole, harms the interests of all investors.

“Delaware has always protected the rights of minority shareholders and will continue to do so, because doing so is good business.” Jonathan Macey, professor at Yale Law School

SB 21 “provide[s] high levels of protection to stockholders, but in a balanced way that provides corporations with a reliable road map to efficiently conducting business.” Former Chancellor and Chief Justice of the Delaware Supreme Court Leo Strine Jr. and former Chancellor William Chandler III 

SB21 addresses very real concerns about doing business in Delaware: Legal experts have been voicing concerns about Delaware’s position as a leader as a place to do business.

“Rita-Anne O'Neill of Sullivan & Cromwell asked M&A practitioners how they're advising their clients who have questions about Delaware currently, and Scott Barshay of Paul Weiss said he's telling them there's no need to look elsewhere, stating the Delaware legislature is on track to assuage concerns [by adopting Senate Bill 21] about established companies reincorporating in another state or new public companies not starting out in Delaware to begin with.”

Delaware Business Court Insider, Mar. 6. 

Delaware once again gets it: Governor Meyer and the State’s Senate and House leaders once again show the state is committed to providing meaningful guidance to the market and to all of Delaware’s corporate constituents and will work hard to strengthen Delaware’s status as the jurisdiction of choice for incorporation, drawing on core principles from its predictable body of corporate law.  

“We support these proposed amendments as a step toward restoring confidence in Delaware’s corporate law, and as confirmation that Delaware remains able and willing to address the concerns of its corporate constituents as they arise.” Martin Lipton of Wachtell Lipton in the Harvard Law School Forum on Corporate Governance post, Feb. 21.

Problems were identified and solutions found: This is not a knee-jerk reaction to recent cases. The underlying issues that the proposed legislation seeks to address were highlighted as early as 2022 in an article penned by two prominent former members of Delaware’s judiciary and one of the nation’s leading corporate law academics. Recent cases highlighted the urgency needed to implement the reform to optimize Delaware’s corporate law.  

Delaware’s leadership is nimble and is able to solve critical issues quickly to benefit all Delaware residents: Like the cutting-edge and dynamic businesses that have chosen Delaware as their home for incorporation, the State of Delaware, unlike any other state, has shown it can deftly respond to legitimate concerns that affect Delaware’s economy and quality of life. Moving swiftly to address problems doesn’t mean abandoning best practices for creating public policy.

In fact, the opposite is true—because Delaware has tested processes in place it can nimbly address issues like SB21. SB21 is the product of input from experts across the legal profession, stakeholders, and government.

The proposed legislation must be approved by the both chambers of Delaware’s General Assembly, in each case with the two-thirds vote required by Delaware’s constitution for changes to the corporation law, and must be signed by the Governor.  

“Delaware is the world’s preeminent center of corporate jurisprudence. 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.” Matt Meyer, governor of Delaware

Delaware corporate law has always been a beacon with a century-long history and tradition: Delaware law has long been guided by expert corporate law practitioners and scholars and thoughtful elected officials who make policy and adopt laws that strike the appropriate balance between corporate actions and stockholder rights. Delaware has always supported and respected maximizing stockholder value, stockholder rights, and the good faith business judgments of directors and officers. Delaware has long recognized that stockholder litigation serves an important function, but that it cannot be deployed in a manner that paralyzes officers and directors from pursuing transactions that benefit all stockholders.  That is what this legislation is about – bringing back the balance that corporations and their directors, officers, and stockholders have long come to expect from Delaware and its continued support of these principles. 

“Delaware’s judiciary remains one of the strongest, most diligent and most responsive judicial bodies in our nation. Its reputation for excellence has developed over generations, with the best corporate law practitioners from all across the world having contributed to Delaware’s jurisprudence. The framework laid out in SB 21 provides clarity and reassurance to both the corporate and legal community, with a view to promoting predictability and fairly balancing the interest of investors and managers.” Lawrence Hamermesh, professor emeritus at Delaware Law School, in Delaware Business Court Insider article, Feb. 18, and other media outlets.

This is not a first: Over the years, Delaware has ensured that its corporate law adapted appropriately to changes in the business environment. Since a substantial revision in 1967, the Delaware General Corporation Law (DGCL) has been regularly updated to address emerging business needs and to align with Delaware public policy and business and economic realities.

SB21 Strengthens the Delaware Chancery Court – This legislation creates clear guideposts for Delaware corporations and brings stockholders’ and boards’ rights back to their traditional balance. This will help Delaware corporations plan transactions and will assist judges in evaluating the merits of complaints challenging transactions.