Controversial updates to Delaware’s General Corporate Law (DGCL) head to the House floor.
Senate Bill 21 to amend Delaware’s world-renowned corporate law that proponents say will save the state’s corporate franchise is on the doorstep of reaching the Governor's desk, despite vocal opposition.
The bill, which cleared the House Judiciary Committee this week, was written as an effort to keep companies from reincorporating in other states following the public exit of Tesla and Dropbox and the threatened departures of other big-names, such as Facebook parent company Meta and Pershing Square Capital Management.
Delaware is the corporate home to 2.2 million registered entities, including two-thirds of Fortune 500 companies.
The corporate law community has appeared split on if a max exodus of corporations from Delaware is truly imminent, but state leaders seem to be in consensus that they cannot afford to wait to take action.
Delaware relies on corporate tax income for nearly a third of the state’s revenue, but opponents argue these changes are rushed and could be detrimental to minority stockholders if their protections are diminished.
"This bill — SB 21 in its current form — is not the way to address the risks. It has been rushed. It has been one-sided, and there's a lack of analysis of the future effects of the bill. We need to slow down, we need to hit the pause button and we need to actually do the work to get this right to do the right thing to protect Delaware," said Ben Potts at the bill's hearing in the House Judiciary Committee, an attorney who specializes in corporate litigation in the Delaware Court of Chancery. His sentiments were echoed by various other public comments on the bill.
The proposed changes would reduce the threshold required for most conflicted transactions within companies to occur and raise the threshold necessary for shareholders to make books and records requests.
State Rep. Sophie Phillips (D-Bear) offered an amendment to allow corporations to opt into the new requirements outlined in the bill.
“I wanted to vote on a version of SB 21 because I do think it is important, so this is kind of my compromise to it. So we can pass SB 21, and then corporations would have the opportunity to opt into the legislation," she said during the bill's hearing.
But the bill's sponsor, State Rep. Krista Griffith (D-Fairfax), said such an "opt-in" feature would defeat the purpose of the legislation.
“I have heard criticism though from those who are transactional attorneys here and professors here that that proposal actually would have the adverse effect and do exactly what we're trying not to do which is lose corporations to other jurisdictions," Griffith said.
Her concerns arose largely around corporations' need to vote to change their corporate charter if they were to adopt Phillips' proposal, which Griffith argued is too "cumbersome."
State Rep. Bryan Shupe (R-Milford) agreed with Griffith, stating if a company's founding documents need to be changed, they could consider looking at reincorporating in another state regardless.
"If a company wanted to opt in to this amendment— that is the exact point where a company will go look at all their possibilities, and that's just facts. That is the exact point where you tell me as a state, that I have to change my founding documents if I want to opt into this process, that I go look at every single other option that's available to me, and I know that from being a small business owner," Rep. Shupe said.
Close to 30 members of the public testified against the bill during the committee hearing, several of whom were corporate lawyers asking legislators to at least consider Phillips’ amendment.
Tuesday, Americans for Financial Reform and the American Association for Justice released findings from a YouGov Blue poll of 600 Delaware voters that revealed widespread opposition to Senate Bill 21.
The poll, conducted March 7-14, 2025, found that 45% of Delaware voters oppose Senate Bill 21, and only 21% support the bill .
Only 12% said the law should be changed to be more favorable to large shareholders to try to keep them in Delaware and 68% advocated that Delaware should "stand up to powerful corporations and billionaires when they try to write laws to benefit them at the expense of ordinary people."
Although not in a direct response to the poll, Secretary of State Charuni Patibanda-Sanchez — who supports Senate Bill 21 — said at the bill's House committee hearing she feels concerned that not enough Delawareans understand what the corporate franchise is and why it is so vital to the state.
"I don't think the average Delawarean understand the importance of the franchise or what the franchise even is," Patibanda-Sanchez said to members of the House Judiciary Committee. "So my office is taking a deep-dive into understanding a little bit more about how we as the Department of State can communicate this better to the public — to educate the public. We think that it's been hidden for far too long."
The bill passed unanimously among members present in the Senate a week ago.
Gov. Matt Meyer has called the bill a necessary step in "ensuring the state remains the premier home for U.S. and global businesses," and is expected to sign the bill into law, if it passes the House.
