DelawareSB 95153rd General Assembly (2024–2026)Senate

AN ACT TO AMEND TITLE 8 OF THE DELAWARE CODE RELATING TO THE GENERAL CORPORATION LAW.

Sponsored By: Darius J. Brown (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

10 provisions identified: 2 benefits, 7 costs, 1 mixed.

Shareholders gain protection from legal fees

Beginning August 1, 2025, Delaware corporate charters and bylaws cannot shift covered legal costs onto shareholders. This covers internal corporate claims and other claims brought as a shareholder or on the corporation’s behalf. The ban covers the corporation’s or another party’s legal fees and expenses. Fee terms in a shareholder agreement or another writing signed by the affected shareholder remain enforceable.

Corporations can cancel defective filed documents

Beginning August 1, 2025, Delaware corporations can cancel certain defective documents by filing a correction certificate with the Secretary of State. This covers documents that inaccurately record corporate action or were improperly signed, sealed, or acknowledged. The certificate must identify the defect and state that the document is void or canceled. Cancellation generally takes effect on the original filing date. For someone substantially harmed by cancellation, it takes effect when the correction is filed.

Corporate registered agents face tighter rules

Beginning August 1, 2025, registered agents for Delaware and out-of-state corporations cannot work solely through virtual offices or mail-forwarding services. This includes work done only through the internet or other remote communication. Agents must maintain a generally open Delaware business office or be individuals generally present to accept legal papers. They must accept and forward legal papers and communications, and forward annual reports or provide electronic notice. Agents must also meet identity-check rules; corporate agents serving out-of-state corporations must be authorized to do business in Delaware.

Corporations must report accurate business details

Beginning August 1, 2025, Delaware corporate annual reports must describe the business and give its actual main business address. A registered agent’s address is allowed only when the corporation operates there in Delaware and serves as its own agent. Reports must list the Delaware registered office and agent, plus names and addresses of all directors and the signing officer. They must also report authorized and issued shares, their par value or tax valuation, and further information the Secretary requires.

Fractional-share records must identify their holders

Beginning August 1, 2025, Delaware corporations cannot issue bearer-form scrip or warrants in place of fractional shares. These instruments represent interests smaller than one full share. They must use registered form, identifying the holder, either with or without a paper certificate.

Out-of-state corporations must clear overdue fees

Beginning August 1, 2025, out-of-state corporations must clear overdue reports and fees to regain forfeited Delaware business qualification. They must file a reinstatement certificate and every annual report due during the forfeiture period. They must also pay all required fees from that period. Reinstatement restores their qualification as though the forfeiture had not occurred.

Corporate filing fixes cannot unlock refunds

Beginning August 1, 2025, validation filings cannot lower earlier franchise taxes or interest, or produce refunds for those periods. Additional tax and interest for earlier periods use the rates in effect when calculated. Delaware cannot refund taxes, penalties, or interest tied to correction or validation filings. When authorized stock changes during a year, corporations must calculate tax for each period and add the prorated amounts. Other reduction or refund requests remain due by March 1 of the second calendar year after the tax year.

Investment companies lose special tax calculation

For tax years beginning on or after January 1, 2026, Delaware removes its special franchise-tax calculation for regulated investment companies. The repealed calculation used average gross assets and included a $100,000 annual cap. Companies qualifying as regulated investment companies under federal tax law must use other applicable Delaware franchise-tax calculations. The change does not establish whether any particular company pays more or less.

Returning corporations face back-tax payment rules

Beginning August 1, 2025, domestic corporations seeking revival after charter forfeiture must pay taxes, penalties, and interest due at forfeiture. Revival more than five years later carries an enhanced penalty equal to three times the annual tax at current rates. Revived corporations validating acts from forfeited or void periods must file overdue annual reports and pay those periods’ taxes and interest. Those reports and payments are due when the validation certificate is filed. Certificates undoing dissolution or restoring existence must include the original incorporation filing date.

Shareholder lawsuits retain Delaware court access

Beginning August 1, 2025, Delaware corporations can set required courts or venues for covered shareholder lawsuits. Their charters and bylaws cannot block internal corporate claims from Delaware courts. For other covered corporate-affairs claims, at least one Delaware court with jurisdiction must remain available. These terms cannot block Delaware’s federal district court when it has jurisdiction and must follow court jurisdiction rules. The restriction does not cover forum terms in a shareholder agreement or another writing signed by the affected shareholder.

Sponsors & Cosponsors

Sponsor

Darius J. Brown
Democratic • Senate

Cosponsors

William Bush
Democratic • House
Krista Griffith
Democratic • House
Kyra L. Hoffner
Democratic • Senate
Spiros Mantzavinos
Democratic • Senate
Trey Paradee
Democratic • Senate
Brian Pettyjohn
Republican • Senate
Bryan Townsend
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 59 • No: 0

House vote • 6/25/2025

Passed (2/3 required)

Yes: 39 • No: 0

Senate vote • 5/6/2025