Delaware lawmakers have approved a significant overhaul of the state’s corporate law, aimed at retaining influential business leaders like Mark Zuckerberg. Critics label the bill, SB 21, as a “giveaway to billionaires.” The legislation now awaits Governor Matt Meyer’s signature, who has expressed support for it.
The bill primarily affects companies with controlling shareholders, such as Meta Platforms. It outlines procedures for transactions between a company and its controlling shareholder, making them less susceptible to legal challenges from other investors.
Supporters argue that the bill is necessary to prevent a mass exodus of companies, known as “DExit,” which could severely impact Delaware’s economy. The state’s corporate legal system generates over 20% of its budget revenue.
Critics, including shareholder attorneys and pension fund managers, oppose the bill, arguing it may prompt shareholders to encourage companies to leave Delaware for states with more protective corporate laws. High-profile opposition included a billboard featuring Elon Musk.
The bill limits shareholders’ ability to challenge deals approved by independent board committees or public shareholder votes. It also restricts access to corporate records for investigating conflicts. Despite opposition, several amendments were rejected, including one that would have eliminated the law’s retroactive effective date.
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