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- William Ackman
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- Kerry E. Berchem
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- Paul Choi
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- Arthur B. Crozier Christine Davine
- Renata J. Ferrari
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- Andrew Freedman
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- Jason M. Halper
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- Carl Icahn William P. Mills
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- Theodore Mirvis
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- Sebastian Tiller
- Marc Trevino Jonathan Watkins
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HLS Faculty & Senior Fellows
The Delaware Law Series
Delaware Enacts Important Corporate Law Reforms
Matthew A. Schwartz and Brian T. Frawley are Partners, and William S.L. Weinberg is an Associate, at Sullivan & Cromwell LLP. This post is based on their Sullivan & Cromwell memorandum.
New Law Provides Statutory Clarity for Directors, Officers, and Stockholders
SUMMARY OF NEW DGCL AMENDMENTS
On March 25, 2025, Delaware Governor Matt Meyer signed into law Substitute 1 to Senate Bill 21 (“SB 21”) after both houses of the General Assembly swiftly passed the bill to stem the tide of announced redomestications to other states. As discussed in our prior memo, these amendments to the Delaware General Corporation Law (“DGCL”) provide certainty to key areas of Delaware corporate law and, depending on judicial interpretation, could help reduce litigation risks for Delaware corporations and their boards of directors. The law took effect upon the Governor’s signature. The new law is substantially similar to the original proposal, with certain minor variations as set forth below.
Which Officers and Employees Have Advancement Rights?
Stephanie M. Hurst is a Partner and Andrew J. Stanger is a Professional Support Lawyer at Mayer Brown LLP. This post is based on their Mayer Brown memorandum, and is part of the Delaware law series; links to other posts in the series are available here.
In a notable opinion that impacts how Delaware corporations consider advancement of litigation expenses to their officers and employees, the Delaware Chancery Court signaled that, when corporations grant a right to advancement of litigation expenses, the corporation should take extra care in how it defines who is entitled to such advancement. An imprecise definition or description of those entitled to advancement may result in a corporation incurring much greater advancement expenses than it might have anticipated.
Texas is Disrupting Delaware’s Dominance through Innovation
Jonathan Macey is Sam Harris Professor of Corporate Law, Corporate Finance and Securities Law at Yale Law School and Professor in the Yale School of Management, and Roberta Romano is Sterling Professor of Law at Yale Law School and Co-Director of the Yale Law School Center for the Study of Corporate Law. This post is part of the Delaware law series; links to other posts in the series are available here.
Disruptive innovation has come to the jurisdictional competition for corporate charters.
For decades, the biggest obstacle facing states seeking to challenge Delaware’s dominance in the jurisdictional competition for corporate charters was their inability to replace Delaware’s massive inventory of highly developed case law precedent. This body of law, coupled with the promise that an elite cadre of sophisticated judges would interpret new legal disputes against the background of these precedents, allowed Delaware to offer what its competitor-states could not: certainty and predictability. Until now that is.
Delaware’s position seemed insurmountable because competing with Delaware required other states to match Delaware’s certainty and predictability. This certainty and predictability was possible because of Delaware’s large body of precedential case law and its specialized and exclusive trial court. While a state could alleviate an absence of controlling precedents by incorporating Delaware decisions into its case law, as Delaware did when it superseded New Jersey as the leading domicile state in the early Twentieth Century, that does not resolve the problem going forward of having judges with expertise deciding new issues as the business environment changes. Companies that wanted to do complex deals like public offerings of debt or equity, the pursuit of an active mergers and acquisitions program, the implementation of antitakeover devices and major restructurings relocated to Delaware because their advisors told them that the law in rival jurisdictions was too undeveloped and uncertain. Companies, and their officers and directors have a high demand for legal certainty when facing litigation risk and are willing to pay for it. And pay for it they did, by opting in to the high-fee, litigation world of Delaware corporate law.
Delaware Corporate Law: Recent Trends and Developments
Howard L. Ellin, Edward B. Micheletti and Jenness E. Parker are Partners at Skadden, Arps, Slate, Meagher & Flom LLP. This post is based on their Skadden memorandum, and is part of the Delaware law series; links to other posts in the series are available here.
On January 28, 2025, Skadden hosted a webinar on recent developments in Delaware corporate law. Skadden partners Howard Ellin (Mergers and Acquisitions/New York), Ed Micheletti (Litigation/Wilmington) and Jenness Parker (Litigation/Wilmington) discussed:
- Numerous decisions and trends in books and records requests
- Sale process transactions
- Controlling stockholder issues
- Derivative litigation, including Caremark claims and special litigation committee developments
- Advance notice bylaws
Below are high-level takeaways.
Rethinking Shareholder Contracting: The Design of Corporate Altering Rules
Sarath Sanga is a Professor of Law and Co-Director of the Center for the Study of Corporate Law at Yale Law School, and Gabriel Rauterberg is a Professor of Law at the University of Michigan Law School. This post is based on their recent article forthcoming in Yale Journal on Regulation, and is part of the Delaware law series; links to other posts in the series are available here.
Delaware corporate law has stepped into uncharted territory. The spark came from West Palm Beach Firefighters’ Pension Fund v. Moelis (Del. Ch. 2024), where a shareholder agreement handed near-total veto power to a controlling shareholder, eclipsing the board’s authority. Even among the shareholder agreements adopted by public companies, the Moelis agreement was unusually extreme. The Chancery Court struck it down as inconsistent with Delaware’s commitment to board-centric governance under Section 141(a). But within months, the legislature countered with the new Section 122(18), enabling precisely such contractual arrangements—with no requirement for the broad shareholder processes that normally accompany major governance changes. This dramatic sequence has reignited a fundamental debate in corporate law: Whether core features of corporate governance should remain mandatory and inviolable, or whether sophisticated parties should be free to contract around them as they see fit.
In a new paper, Altering Rules: The New Frontier for Corporate Governance, we argue that today’s debates over shareholder contracting need to be reoriented. The current challenge, we argue, lies not in choosing between rigid mandatory rules or unfettered contractual freedom, but in appropriately designing the mechanisms—the altering rules—that structure how corporations opt out of default arrangements. These rules do far more than simply make changes easier or harder. Instead, they promote distinct bargaining environments that shape how insiders negotiate over changes to governance. As a result, they affect both the potential for innovation and the risk of opportunism.
Delaware
Martin Lipton is a Founding Partner at Wachtell, Lipton, Rosen & Katz. This post is based on his Wachtell Lipton memorandum.
For generations now, Delaware has been the incorporating jurisdiction of choice for publicly-traded business enterprises. This is no accident. Delaware offers structural advantages no other jurisdiction can match: an enabling corporate statute; a rich body of corporate law; expert judges on the Court of Chancery, always ready to resolve complex business disputes, on an expedited basis when necessary; a Supreme Court available to issue equally prompt definitive rulings on contested matters of business-entity law; a sophisticated corporate bar coupled with a welcoming attitude toward out-of-state practitioners; and a Legislature prepared to consider modifications to the statute in the face of evolving conditions and caselaw. These distinctive advantages of Delaware corporate law remain intact.
In the wake of certain judicial rulings that surprised many practitioners, voices from various quarters have called into question the wisdom of Delaware incorporation. We do not join them. While there is no one-size-fits-all answer to important business judgments, and every company’s incorporating decision must be made on its individual merits, we believe Delaware incorporation remains a wise choice for most widely-held business organizations. Delaware remains the gold standard for corporate law in the United States and beyond.
Yesterday, legislation was introduced in the Delaware General Assembly proposing amendments to the Delaware General Corporation Law. These salutary amendments will ensure that Delaware law gives full respect to the good-faith decisions of independent directors and recognizes the primacy of disinterested stockholders when they vote for a transaction. The amendments will also place sensible limits on requests for corporate books and records. Both of these amendments restore conventional rules that have long served Delaware well.
We support these proposed amendments as a step toward restoring confidence in Delaware’s corporate law, and as confirmation that Delaware remains able and willing to address the concerns of its corporate constituents as they arise.
Delaware Corporate Law Myth-Busting: The “Expanding Definition” of Controlling Stockholder
Ben Potts is a Senior Counsel, and Andrew Blumberg and Tom James are Partners, at Bernstein Litowitz Berger & Grossmann LLP. This post is based on a BLB&G memorandum by Mr. Potts, Mr. Blumberg, Mr. James, and James Janison, and is part of the Delaware law series; links to other posts in the series are available here.
This note is the first in a series intended to bust several burgeoning myths about the history and trajectory of Delaware common law governing controlling stockholders. These myths are being framed as new and dangerous problems that must be solved if Delaware is to remain the preferred domicile in the United States for corporations, and especially for controlled corporations. In the words of one commentator, “Delaware courts need a course correction” because “[t]hey have pushed the law governing controlling shareholders far beyond legitimate policing into unnecessary and unwise overregulation.”[1]
We argue that the as-framed “problems” are not new, dangerous, or real. The judicial decisions on which the commentators seize uphold Delaware law’s uncontroversial purpose to minimize agency costs, including by preventing or remedying controllers’ tunneling of value away from corporations and their minority stockholders. Rather than a dramatic or unexpected shift in the law of controllers, the decisions represent a conservative and common-sense application of longstanding equitable principles. The result is a clear and approachable framework that appropriately accounts for the ways control rights are allocated in modern corporations. That makes for both good law and good policy and best facilitates wealth creation.
Thirty Years Later – Why Corporations Continue to Choose Delaware: General Perspectives and Thoughts on Proposed Amendment
Eric S. Klinger-Wilensky, William M. Lafferty, and John P. DiTomo are Partners at Morris, Nichols, Arsht & Tunnell LLP. This post is based on their Morris Nichols memorandum.
Thirty years ago, our now-retired partner Lew Black released his widely read article, “Why Corporations Choose Delaware.” Describing the legislature’s role in the Delaware corporate franchise, Lew wrote, “[a]s a result of its long experience with corporation law matters, and the importance of those matters to Delaware, the legislature has developed a philosophy which emphasize[s] the stability of Delaware corporate law.” Lew also observed that “[t]he guiding principle that underlies legislation affecting corporations in Delaware is to achieve a balanced law.”
Consistent with that philosophy and guiding principle, on Monday, February 17, 2025, the General Assembly publicly released proposed amendments to the Delaware General Corporation Law (“DGCL”). [1] The amendments, which we refer to in this memorandum as the “Balancing Amendments,” are intended to rebalance certain aspects of Delaware law relating to conflict transactions, controlling stockholder liability, and books and records demands. They do so by: (i) clarifying the means by which disinterested directors or disinterested stockholders may approve conflict transactions; (ii) limiting the liability of controlling stockholders to breaches of the duty of loyalty and actions taken in bad faith or involving improper self-interested actions; and (iii) setting forth certain conditions that a stockholder must satisfy in order to demand inspection of a corporation’s books and records, and describing the materials that a stockholder may obtain in such an inspection. The Balancing Amendments, if adopted, would offer a practical path for corporations to approach conflict transactions while still preserving accountability of corporate decisionmakers to stockholders. At the same time as the Balancing Amendments were released, the General Assembly released a proposed concurrent resolution (“Concurrent Resolution”) that would direct the Council (“Council”) of the Corporation Law Section of the Delaware State Bar Association (“DSBA”) to present a report to the Governor and the General Assembly on or before March 31, 2025, with recommendations for legislative action that might help the judiciary ensure that awards of attorney’s fees provide incentives for litigation appropriately protective of stockholders but not so excessive as to act as a counterproductive toll on Delaware companies and their stockholders. The Concurrent Resolution would direct the Council, in considering any such recommendation, to examine the utility of a cap on such awards based on a multiple of lodestar amounts (i.e., amounts determined by multiplying the time devoted by plaintiffs’ counsel to the matter by their ordinary hourly billing rates).
Delaware Legislators and Governor Propose Landmark Legislation
William B. Chandler III, Amy Simmerman, and Brad Sorrels are Partners at Wilson Sonsini Goodrich & Rosati. This post is based on their Wilson Sonsini memorandum, and is part of the Delaware law series; links to other posts in the series are available here.
On February 17, 2025, Delaware’s legislative leaders and Governor announced landmark legislation and initiatives that would, if enacted into law, result in welcome and much-needed amendments to Delaware corporate law to address problems of recent vintage. The legislation and initiatives address critical topics, including director independence, controlling stockholders, stockholders’ books and records inspection rights, and plaintiffs’ attorney fee awards. The legislative efforts have been introduced at a time of growing debate over the vitality of Delaware corporate law and in response to case law developments that have frustrated boards of directors, corporate management, and investors. These legislative efforts would, in our view, restore Delaware law to what it was before those recent developments and mark a return to the stability, predictability, and balance that long characterized Delaware law.
Many clients have been discussing with us their concerns about Delaware law. We think that clients evaluating these issues will want to seriously consider the potential benefits of the proposed amendments, combined with the already significant built-in advantages that have long made Delaware the primary state of incorporation, and closely monitor their status.
Statement Regarding the Activision Amendments
Michael Hanrahan is Director at Prickett, Jones & Elliott, P.A. and Litigator in the Delaware Court of Chancery. This post is based on his recent statement and is part of the Delaware law series; links to other posts in the series are available here.
In 2024, Delaware enacted extensive amendments to the Delaware General Corporation Law to overrule three recent opinions by the Delaware Court of Chancery. Many of these hurriedly written amendments attack the Court’s February 29, 2024 Activision opinion.
In Activision, the Delaware Court of Chancery held that the plaintiff, a former Activision stockholder, had stated a claim that Activision and its board of directors had not complied with the requirement of Delaware’s merger statute, 8 Del. C. § 251, which requires that the board approve an agreement of merger that contains specified items, such as the merger consideration and the terms of the certificate of incorporation of the surviving corporation.[1] Because a merger is such a fundamentally important transaction affecting the ownership of the corporation, Section 251 imposes mandatory steps for the protection of the stockholders.[2]
The Activision opinion was preliminary. There had been no discovery, trial, final decision or appeal. However, within days, rushed efforts began, not only to overturn the Court’s Section 251 analysis of a draft merger agreement, but also to drastically diminish the standards for other board approvals and actions. Unlike the careful process and consideration Delaware usually employs for DGCL amendments, the multiple statutory changes directed at Activision were hastily concocted. As a result, the Activision Amendments are overbroad, imprecise and undermine the Court of Chancery and the DGCL’s protection of stockholders.