Effective March 25, 2025, Delaware Governor Matt Meyer signed Senate Bill 21, introducing significant amendments to the Delaware General Corporation Law (DGCL), specifically updating Sections 144 and 220. These changes took immediate effect and apply to corporate acts and transactions occurring on or after the signing date, with limited exceptions for proceedings that were pending before February 17, 2025.
Under the updated Section 144, Delaware now provides statutory safe harbors for certain interested-person and controlling stockholder transactions. These changes codify aspects of the MFW (Kahn v. M&F Worldwide) framework as a legislated option. Rather than requiring both committee approval and minority shareholder approval, conflicted transactions may now qualify for safe harbor if they satisfy either of two alternative cleansing mechanisms: committee approval by a board committee composed of at least two disinterested directors acting in good faith without gross negligence, or an informed, uncoerced affirmative vote by a majority of the disinterested stockholders.
If neither mechanism applies, the transaction may still proceed if it meets the “entire fairness” standard. The amendments also relax prior jurisprudence by requiring only a majority of disinterested directors on a committee, rather than full independence, and allow for ratification after the fact rather than mandating that the committee be formed before negotiations begin. Controlling stockholder liability for breaches of the duty of care is explicitly limited under these updates.
For going-private transactions, the statutory safe harbor preserves the MFW dual-approval standard—requiring both committee and disinterested stockholder approval for business judgment rule protection—but removes the pre-negotiation timing requirement previously imposed by Delaware courts. The legislation introduces statutory definitions of terms such as “controlling stockholder,” “control group,” and “disinterested director” to further clarify the application of Section 144.
Separately, Section 220 has been revised to refine and narrow stockholder inspection rights. The amendments now define a specific set of documents considered corporate “books and records,” including the company’s certificate of incorporation and bylaws, minutes of stockholder and board meetings (including written consents), written communications to stockholders, board materials, annual financial statements for the past three years, certain stockholder agreements, and director or officer independence questionnaires.
Stockholders must now make inspection demands in good faith and for a proper purpose, clearly specify the records sought, and demonstrate that the request relates directly to the stated purpose. A compelling-need exception remains, allowing the Delaware Court of Chancery to authorize production of documents beyond the enumerated list if the petitioner provides clear and convincing evidence that such records are essential. The court also retains discretion to impose confidentiality restrictions, require redactions, or limit the use of produced materials.
Together, these amendments aim to increase legal clarity in managing conflicted transactions and reduce litigation risks associated with Section 144 cases. They also streamline administrative burdens under Section 220 by curbing overly broad or speculative information demands. Legal advisors across the corporate sector are recommending prompt reviews and updates to governance frameworks to ensure alignment with the revised laws, particularly regarding safe harbor compliance and document inspection protocols.
While these reforms have been welcomed by many in the corporate legal community as a step toward modernizing and simplifying Delaware’s corporate code, some shareholder advocates have expressed concern that the changes may weaken investor protections and reduce the scope of judicial oversight that has traditionally underpinned Delaware’s status as the nation’s leading corporate domicile.
