Delaware Lawmakers Propose Bill to Limit Shareholder Lawsuits

In response to high-profile companies like Tesla and Meta considering relocation, Delaware lawmakers have introduced a bipartisan bill aimed at reshaping corporate law by limiting shareholder lawsuits and protecting corporate boards. The proposed legislation seeks to restrict the types of internal records accessible to shareholders, thereby making it more difficult for them to pursue legal actions against directors and controlling shareholders. State Senator Bryan Townsend emphasized the urgency of this bill, as competition from states like Texas, which has established a rival business court, threatens Delaware's status as the corporate home for many S&P 500 companies. Governor Matt Meyer supports the bill, asserting that Delaware continues to be a leading incorporation venue with over two-thirds of Fortune 500 companies registered in the state. Critics argue that these changes could undermine corporate accountability and enable misconduct. As lawmakers navigate this complex issue, the debate reflects the challenge of maintaining Delaware's corporate dominance while ensuring robust governance.