DelawareSS 1 for SB 21153rd General Assembly (2024–2026)Senate

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

Sponsored By: Bryan Townsend (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

6 provisions identified: 2 benefits, 1 costs, 3 mixed.

Directors can inspect broader company records

Directors can inspect the company’s stock ledger, stockholder list, books, and other corporate records. Their purpose must reasonably relate to their role as directors. The Court of Chancery alone decides disputes over this access. The company must prove that a challenged inspection has an improper purpose.

Stockholders can seek additional company records

The Court of Chancery can order substitute records when a company lacks certain required records. These include board or committee minutes and actions, financial statements, and independence questionnaires. Substitutes must be necessary and essential to the stockholder’s proper purpose. For records beyond the statutory list, stockholders must meet the inspection requirements and show a compelling need. They must also prove, with clear and convincing evidence, that the specific records are necessary and essential; reasonable restrictions can apply. These routes take effect upon enactment and exclude inspection demands made on or before February 17, 2025.

Investors lose some controlling-owner damage claims

Stockholders cannot collect monetary damages from controlling stockholders or control-group members solely for breaching the duty of care. This protection applies when those owners act in their controlling-owner role. It does not cover loyalty breaches, bad faith, intentional misconduct, knowing law violations, or improper personal benefits. The rule takes effect upon enactment and covers earlier and later acts. It excludes court cases completed or pending on or before February 17, 2025.

Company insiders gain shields against lawsuits

The law protects directors and officers from damages and court-ordered relief over qualifying deals involving their own interests. A deal qualifies through informed approval by disinterested directors, informed and unpressured stockholder approval, or fairness to the company and stockholders. Director approval requires a majority of disinterested directors serving, acting in good faith and without gross negligence. If most directors are not disinterested, the director-approval route requires a committee of at least 2 disinterested directors. Interested directors can count toward a quorum, and disinterested directors can approve even without making up a quorum. At exchange-listed companies, directors the board finds independent under exchange rules are presumed disinterested; rebuttal requires substantial, specific evidence of a material interest or relationship. Nomination by an interested person alone does not prove a director has a conflict. The amendments take effect upon enactment and cover earlier and later acts, but exclude court cases completed or pending and inspection demands made on or before February 17, 2025.

Controlling owners gain deal lawsuit protections

Qualifying deals involving controlling stockholders or control groups are protected from damages and court-ordered relief against covered participants. For deals that do not take the company private, one route is enough: committee approval, disinterested-stockholder approval, or fairness. The committee needs at least 2 disinterested directors and authority to negotiate or oversee negotiations and reject the deal. Members must know the material facts, and a majority must approve or recommend the deal in good faith without gross negligence. The stockholder route requires the deal to be conditioned on an informed, unpressured majority of votes cast by disinterested stockholders. Going-private deals need both approval routes, or must be fair to the company and stockholders. Controlling-stockholder tests cover majority voting power, director-election rights, or at least one-third voting power plus the required managerial authority, including affiliates and associates. Going-private deals include covered federal securities transactions and, for other companies, deals eliminating all or nearly all disinterested stockholders’ shares. The rules take effect upon enactment and cover past and future acts, excluding court cases completed or pending by February 17, 2025. Common-law duties and remedies, including fairness review and claims for helping a breach, remain subject to the statutory protections.

Stockholders get defined records with limits

The law lists company records stockholders can request, including the charter, bylaws, board and committee minutes, and board materials. It also includes stockholder meeting minutes and written consents, stockholder communications, and annual financial statements from the preceding 3 years. Covered records also include specified company agreements and director and officer independence questionnaires. Requests must be made in good faith, clearly describe the purpose and records, and seek records specifically tied to that purpose. The purpose must reasonably relate to the requester’s interest as a stockholder. Beneficial owners must document ownership and certify a true copy; agents or attorneys need written authorization. Companies can impose reasonable confidentiality, use, and sharing limits and remove material unrelated to the stated purpose. Produced information is treated as part of related complaints based on that information. The Court of Chancery alone decides inspection disputes and can order inspection, copies, or extracts. The amendments take effect upon enactment and do not apply to demands made on or before February 17, 2025.

Sponsors & Cosponsors

Sponsor

Bryan Townsend
Democratic • Senate

Cosponsors

Timothy D. Dukes
Republican • House
Krista Griffith
Democratic • House
Kerri Evelyn Harris
Democratic • House
Gerald W. Hocker
Republican • Senate
Russell Huxtable
Democratic • Senate
S. Elizabeth Lockman
Democratic • Senate
Melissa Minor-Brown
Democratic • House
Edward S. Osienski
Democratic • House
Brian Pettyjohn
Republican • Senate
Ray Seigfried
Democratic • Senate
David P. Sokola
Democratic • Senate
Jeffrey N. Spiegelman
Republican • House

Roll Call Votes

All Roll Calls

Yes: 52 • No: 7

House vote • 3/25/2025

Passed (2/3 required)

Yes: 32 • No: 7

Senate vote • 3/13/2025