Governor Meyer urges quick approval of Senate Bill 21

Delaware State Senate passes Senate Bill 21. (Photo from delaware.gov)

THIS STORY HAS BEEN UPDATED

WILMINGTON-  Despite the criticism from legal experts, Governor Matt Meyer’s Senate Bill 21 advanced to the House on Wednesday. 

The legislation seeks to address ambiguities in corporate decision-making by providing a safe harbor for independent directors and refining shareholder governance structures. These updates are designed to strike a fair balance between management authority and shareholder protections, so Delaware remains an attractive jurisdiction for businesses.

“For over a century, Delaware has been the most sought-after state for business owners—small and large—to incorporate,” said Governor Meyer.

 “That reputation is built on our ability to swiftly adapt to market demands while maintaining clarity, predictability, and fairness in corporate oversight.”

Highlighting the urgency of this legislation, Meyer urged state lawmakers to pass Senate Bill 21 swiftly.

 “We are at a pivotal moment where we must once again demonstrate why we lead in corporate governance. I call on both chambers to act with the urgency this issue demands.”

The bill updates Section 144 of Delaware’s General Corporation Law to establish safe harbor protections for transactions involving directors, officers, or controlling stockholders with potential conflicts of interest.

The bill defines controlling stockholders as those who:

• Own or control a majority of voting power
• Have the right to elect a majority of the board
• Exercise significant managerial control

It also establishes protections for transactions involving controlling stockholders, ensuring they follow fair governance processes.

The economic significance of corporate incorporation

Delaware’s corporate franchise is a cornerstone of the state’s economy, contributing approximately $2.2 billion—more than one-third of the state’s budget. 

The state is home to 2.2 million registered entities, more than twice its population, and incorporates 81% of the U.S. IPOs in the past year alone.

SB21 has support from Congress

Senator Darius Brown (D), Chair of the Senate Judiciary Committee, released the following statement Wednesday afternoon:

“Today, the Delaware Senate Judiciary Committee took a significant step in reaffirming our state’s leadership in corporate law by releasing Senate Bill 21 from committee. This legislation underscores Delaware’s unwavering commitment to maintaining its status as the premier jurisdiction for corporate incorporation. Delaware’s legal framework has long been a cornerstone of stability, efficiency, and reliability for corporations worldwide.

Senator Darius Brown represents the Second Senate District which includes New Castle, Wilmington and Edgemoor. (Photo from delaware.gov)

The recommendations from the Delaware Bar and Corporate Legal Counsel were instrumental in shaping this legislation and guiding our decision. Their expertise and insight ensured that SB21 reflects the evolving needs of modern businesses while preserving the principles that have made Delaware’s corporate legal environment a gold standard.

As we move forward, we urge Governor Meyer and our colleagues in the Delaware House of Representatives to join us in supporting SB21. Together, we can ensure that Delaware remains a beacon of innovation and excellence in corporate governance, fostering an environment where businesses can thrive while contributing to the prosperity of our state.”

Senator Gerald Hocker represents the 20th Senate District.(Photo from delaware.gov)

Senator Gerald Hocker (R) Senate Minority Leader, wrote in a statement:

“SB 21 is needed to strengthen certainty and cement the fact that Delaware is where business owners should incorporate. Just as the legislature does each year, we took recommendations from the Corporate Legal Counsel and Delaware Bar about how we can modernize our corporate code and inserted those recommendations into this legislation.

I urge my colleagues in the House of Representatives to quickly pass SB 21 and for our governor to sign the legislation into law, allowing us to remain the preferred state for businesses around the world to incorporate.”

SB 21 faces backlash from legal experts calling it “the billionaire’s bill” 

Despite nearly 20 attorneys and legal experts asking to reconsider SB21 during Wednesdays committee, it was still passed.

Critics of the bill argue that the proposed changes are premature and primarily benefit a handful of billionaires who have openly criticized Delaware’s corporate law system, labeling SB 21 as “the billionaire’s bill.”

Joel Friedlander, partner at Delaware firm Friedlander & Gorris, urged the House to reject SB 21, warning that it threatens the legal stability and judicial expertise that have long established Delaware as the gold standard for corporate governance.

“The bill is a misguided effort to rebrand Delaware as a place where corporate defendants can run to the legislature to overrule our widely respected courts,” Friedlander wrote in a statement.