Delaware Revamps Its General Corporation Law — Will It Stop Companies from Leaving?
What You Need To Know Delaware has adopted significant, much anticipated amendments to §§ 144 and 220 of the Delaware General Corporation Law, which are aimed at providing greater clarity and predictability to corporate fiduciaries in light of certain recent controversial decisions from the Delaware Court of Chancery. Those decisions have resulted in a number […]
Posted by David Bell, Marie Bafus, and Dean Kristy, Fenwick & West LLP, on Sunday, April 6, 2025
Editor's Note:
David Bell, Marie Bafus, and Dean Kristy are Partners at Fenwick & West LLP. This post is based on a Fenwick memorandum by Mr. Bell, Ms. Bafus, Mr. Kristy, and Wendy Grasso, and is part of the Delaware law series; links to other posts in the series are available here.
What You Need To Know
- Delaware has adopted significant, much anticipated amendments to §§ 144 and 220 of the Delaware General Corporation Law, which are aimed at providing greater clarity and predictability to corporate fiduciaries in light of certain recent controversial decisions from the Delaware Court of Chancery. Those decisions have resulted in a number of high-profile companies reincorporating (or considering reincorporation) into other states and has formation-stage founders questioning the state for initial incorporation.
- The amendments to § 144 provide safe harbor protections for related-party (interested) transactions with directors, officers, controlling stockholders, and members of a control group, including providing specific processes for approval of such transactions and a path for ratification by stockholders after the fact in some circumstances. They also lower the requirements for approving these acts and transactions.
- The amendments to § 220 provide more clarity with respect to the scope and requirements for a stockholder inspection of books and records, providing an exclusive list of items that may be requested (narrowing the universe awarded in some § 220 cases), raising the procedural requirements for such demands, and allowing corporations to impose confidentiality restrictions.
- The amendments, which were first introduced on February 17, 2025, are immediately effective and apply to all prior and future acts and transactions, but do not apply to court proceedings that were pending or completed on or before February 17, 2025, or to stockholder demands to inspect books and records made on or prior to that date.
