On March 25, 2025, Delaware Governor Matthew Meyer signed Senate Bill 21 into law, introducing significant amendments to Sections 144 and 220 of the Delaware General Corporation Law (DGCL). These updates reshape how corporations manage conflicted transactions and handle shareholder access to corporate records, offering greater clarity and predictability in corporate governance.
The amended Section 144 creates a statutory safe harbor for transactions involving directors, officers, or controlling stockholders with potential conflicts of interest. Companies can now shield such transactions from judicial challenge by following one of three clearly defined procedural paths: approval by a majority of disinterested directors or a designated board committee acting in good faith without gross negligence; ratification by a majority of informed, disinterested stockholders; or demonstration that the transaction is substantively fair to the corporation and its stockholders. This safe harbor structure is modeled in part on the MFW framework but offers more flexibility, especially for transactions involving controlling stockholders, where only one of the procedural steps is now required rather than both.
A key feature of the amendments is a new statutory definition of “controlling stockholder.” This term now encompasses individuals or entities with majority voting power, the right to elect a majority of the board, or at least one-third of voting power coupled with operational control. The law also enhances the presumption of board independence when companies adhere to exchange-based standards, making it more difficult for plaintiffs to allege director bias without specific, compelling evidence.
Changes to Section 220—the statute governing stockholder inspection rights—substantially limit the scope of documents shareholders can demand. Going forward, access is restricted to core governance documents, including the certificate of incorporation, bylaws, board and committee meeting minutes, consents from the past three years, financial statements, communications to stockholders, director and officer questionnaires, and key corporate contracts. Redactions are permitted when materials are unrelated to the shareholder’s stated purpose. To access documents beyond this list, shareholders must demonstrate a compelling need tied directly to a proper purpose. Furthermore, any documents obtained under Section 220 and cited in litigation will be deemed incorporated into the complaint, potentially influencing judicial review.
These changes apply retroactively from March 25, 2025, but exclude shareholder demands made before February 17, 2025. Since the amendments were enacted, legal debate has intensified. Critics argue the revisions restrict transparency and could reduce judicial scrutiny of insider transactions. Advocacy groups such as the Council of Institutional Investors have expressed concern that the legislation erodes shareholder rights under the guise of efficiency and legal clarity.
Supporters, however, contend that the changes provide much-needed predictability for boards and legal counsel managing complex transactions and inspection requests. The Delaware legislature acted in part to respond to corporate concerns about “DExit”—the potential migration of companies to states perceived as more favorable for incorporation. By refining the DGCL, Delaware aims to reaffirm its position as the preeminent jurisdiction for corporate law, balancing managerial flexibility with legal safeguards that reduce litigation risk.
For legal practitioners, boards of directors, and investors, these amendments mark a critical shift in Delaware corporate governance. They underscore the importance of robust procedural compliance and clear documentation when managing insider transactions and responding to shareholder information demands. As corporations adjust to the new legal framework, the changes are likely to influence how deals are structured, how records are maintained, and how shareholder activism is navigated in Delaware and beyond.
