Delaware Enacts Controversial Bill to Alter Shareholder Rights

Delaware has enacted a controversial corporate law overhaul known as Senate Bill 21 (SB 21) aimed at retaining companies amid concerns over recent court rulings favoring minority shareholders. The bipartisan legislation, signed by Governor Matt Meyer, introduces measures that reduce protections for minority investors, including limitations on their access to information regarding conflicts of interest. Critics, including institutional investors and legal experts, argue that the changes favor controlling shareholders and could drive companies to seek incorporation in states with stronger shareholder protections. The swift passage of the bill, which followed public pressure from business leaders like Elon Musk, reflects Delaware's reliance on incorporation fees as a significant revenue source. While proponents claim the bill ensures clarity and predictability for corporations, opponents warn it could undermine investor rights and lead to future legal challenges. The new law is seen as a response to fears of corporate migration from Delaware, particularly from tech giants considering moves to states like Texas.