Delaware’s Senate Bill 21 (SB 21), signed into law on March 25, 2025 by Governor Matt Meyer, represents one of the most significant shifts in the state’s corporate law in decades. Drawing bipartisan legislative support, the law overhauls key provisions of the Delaware General Corporation Law, particularly Sections 144 and 220, which govern conflicted transactions and shareholder access to corporate records. Section 144 now includes structured “safe harbor” provisions for transactions involving interested directors or controlling shareholders—but with fewer procedural requirements than traditional case law.
Under the revised SB 21, conflicted transactions may qualify for protection from liability if either independent director approval or informed minority shareholder consent is obtained—not both, as previously required under the Kahn v. M&F Worldwide and Match Group precedents. Moreover, the committee approving the transaction needs only a majority of disinterested directors rather than full board independence. These changes seek to streamline decision-making and retain Delaware’s competitive edge against rival incorporation states.
SB 21’s refinements in Section 220 tighten shareholder inspection rights. The amendments impose stricter documentation requirements for records requests and permit corporations to impose reasonable usage limitations. Proponents argue these revisions restore clarity and predictability to corporate law, protecting both boards and investors from undue litigation. Critics—including the Council of Institutional Investors—assert the law erodes shareholder protections and circumvents legal consistency, especially where legislative speed bypassed traditional advisory processes.
The passage of SB 21 has already led to legal challenges. At least one lawsuit alleges the reforms diminish the Delaware Court of Chancery’s authority, curtailing its historic role in deciding equitable relief and fiduciary duty claims. Observers continue to assess whether these changes will successfully deter the “DExit” trend—a wave of corporations threatening to reincorporate in states with less burdensome corporate frameworks.
Simultaneously, the federal Corporate Transparency Act (CTA)—passed in 2021 with initial enforcement scheduled for January 1, 2025—has introduced major compliance expectations for corporations, LLCs, and similar entities. Under the CTA, firms must report beneficial ownership information, such as individuals owning or controlling at least 25% of an entity, to the Financial Crimes Enforcement Network. This requirement aims to combat money laundering and obscure corporate structures.
The status of beneficial ownership reporting has been in flux through early 2025. A federal injunction delayed enforcement initially, but the U.S. Supreme Court lifted those restrictions in January 2025, prompting FinCEN to set a compliance deadline of March 21, 2025. Shortly after, the Treasury Department announced suspension of enforcement against domestic reporting companies, and on March 21, FinCEN issued an interim final rule effective March 26, exempting all domestic U.S. entities from reporting. Only foreign entities doing business in the U.S. remain subject, with new filing deadlines.
Together, SB 21 and the evolving CTA requirements are reshaping governance norms. For Delaware-incorporated companies, board members must now align transaction processes with SB 21’s good-faith standards and disclosure mandates. At the federal level, entities must evaluate whether beneficial ownership reporting still applies—or whether they qualify for exemption. Legal advisors stress that companies must revise corporate charters, internal approval workflows, compliance programs, and disclosures to reflect both the new fiduciary thresholds and the uncertain scope of beneficial ownership obligations.
The convergence of these reforms creates a new paradigm: heightened emphasis on transparency, while balancing protections for directors and simplifying governance processes. For boards and counsel, understanding the safe-harbor mechanisms, accurate definitions of controlling stockholders, and materials-disclosure requirements is now central to strategic decision-making. Firms are reexamining corporate structures, risk profiles, and charter provisions, preparing either for compliance with beneficial ownership reporting if required, or confidence in their exempt status.
In summary, Delaware’s SB 21 constitutes a transformative moment in corporate law—shifting fiduciary standards, altering shareholder access rights, and codifying procedural safeguards intended to limit litigation risk. At the same time, the CTA’s trajectory—from full inclusion to sweeping domestic exemption—has reshaped expectations over corporate transparency obligations. Together, these developments underscore a governance landscape in flux, where legal teams must navigate evolving standards under both state and federal regimes.
