How did Delaware’s SB 21 reform change corporate law? In corporate circles and the general media, critics framed the reform as a concession to powerful controlling shareholders, while proponents defended it as a necessary response to judicial overreach. Most of the public debate focused on the high-profile provisions concerning who counts as a controlling shareholder and which transactions trigger heightened scrutiny.

But a more revealing change largely escaped attention: SB 21 also eliminated corporate law’s timing requirement. Before SB 21, controllers seeking to cleanse conflicted transactions had to adopt procedural safeguards from the outset (“ab initio”), before deal negotiations began. If a controller initially approached the CEO or board to discuss deal terms, and only later started negotiating with a special committee of independent directors and committed to a majority-of-minority shareholder vote, the transaction remained subject to entire fairness review. Over the preceding decade, the ab initio requirement became one of the most consequential prerequisites in conflicted-transaction litigation. Yet the legislature omitted it without explanation. And neither practitioner nor academic commentary has supplied a theory of why timing matters.

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