Governor Meyer urges quick approval of Senate Bill 21

WILMINGTON-  Governor Matt Meyer introduces  Senate Bill 21, the bill aims to reinforce the state’s reputation for clear and predictable corporate governance.

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, ensuring 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.

Senator Darius Brown, 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.

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.”

SB 21 faces backlash from legal experts

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.

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.