Controversial Delaware SB 21 was signed into law last evening after passage yesterday by the legislature. According to this Statement from the office of Delaware Governor Matt Meyer, the Governor has “signed Senate Bill 21 into law, thanking lawmakers for the swift passage of this critical update to Delaware’s corporate law, aimed at ensuring the state remains the premier home for U.S. and global businesses. The legislation, developed in collaboration with corporate leaders and legal experts, clarifies key governance structures to reinforce Delaware’s reputation for equitable, predictable, and efficient corporate oversight.” The law provides a process for boards to invoke safe harbor protection from litigation over potentially conflicted transactions for directors and controlling stockholders. It also addresses Delaware’s provisions related to books and records. (For a brief summary of the bill, see this PubCo post.) Notably, the legislature rejected five proposed amendments, including a proposed amendment discussed in this PubCo post, providing for an opt-in provision. The legislature also rejected a proposed amendment that would have eliminated the February 17 retroactive effective date.
Delaware Public Media reported some of the discussion in the legislature yesterday: State Rep. Sophie Phillips, who had introduced the opt-in amendment described it as
“‘a modest alternative that would reflect a true compromise and the best of both worlds. I would propose that any corporation could opt into all the provisions of SB 21 as passed by the Senate. The only change would be to require a shareholder vote to adopt those rules,’ Rep. Phillips said.
The amendment was deemed ‘not friendly’ by the bill’s House sponsor State Rep. Krista Griffith (D-Fairfax), who argued requiring companies to opt into the new changes would be too cumbersome and noted it had not been vetted by the Delaware State Bar AssociationCorporation Law Council.
‘The reason behind this bill is to preserve Delaware’s status as a preeminent place to incorporate. Our goal is to have companies stay here, not leave here. The amendment effect adds additional layers that would incentivize these companies even more to leave,’ Rep. Griffith said.
Rep. Phillips countered that the amendment would make opting in to Senate Bill 21’s provisions the same amount of work as a company choosing to reincorporate in another state, but the argument was seemingly not compelling enough to her fellow legislators.
Rep. Phillips’ amendment failed 6-32 with one abstention and two members absent.”
