Delaware's SB 21 creates safe harbours for conflicted and controller transactions and narrows books-and-records demands
Delaware enacted Senate Bill 21 on 26 March 2025, rewriting section 144 of the General Corporation Law to give statutory safe harbours for transactions involving interested directors, officers and controlling stockholders, and narrowing stockholders' books-and-records rights under section 220. It applies to past acts except actions or demands made on or before 17 February 2025. The Delaware Supreme Court upheld it in February 2026.
Delaware's General Assembly passed Senate Bill 21 and Governor Matt Meyer signed it on 26 March 2025. It was a response to concern that companies were reincorporating outside Delaware.
Conflicted and controller transactions (section 144)
- Transactions involving an interested director or officer are protected if approved by a majority of disinterested directors, or by a majority of disinterested stockholders, after full disclosure.
- Controlling stockholder transactions, other than going-private deals, are protected if approved by a committee of at least two disinterested directors or by disinterested stockholders.
- Going-private transactions with a controller need both committee approval and a disinterested stockholder vote.
- Approvals must be given in good faith. The law also defines who counts as a controlling stockholder. Transactions outside the safe harbours remain subject to entire fairness review.
Books and records (section 220)
- 'Books and records' is now a defined, exhaustive list.
- A demand must state its purpose with reasonable particularity.
- The Court of Chancery can order more only where a stockholder shows a compelling need, by clear and convincing evidence.
When it applies
From enactment, including to earlier acts, except actions completed or pending, and books-and-records demands made, on or before 17 February 2025.
Who is affected
Delaware corporations, their boards, special committees and controlling stockholders, and the company secretaries who manage records and stockholder demands.
Later developments
On 27 February 2026 the Delaware Supreme Court upheld the section 144 amendments as constitutional in Rutledge v. Clearway Energy Group.