La lutte du Delaware pour rester le lieu d'implantation privilégié des entreprises
Delaware is feeling the pressure of backlash from resident corporations over recent decisions by the Delaware Court of Chancery in stockholder litigation, as well as from significant competition from other states, like Texas and Nevada, which are making material changes to their respective corporate laws to attract corporations looking for a friendlier new home state. As Foley reported previously, Texas is vying hard to become the preferred jurisdiction for legal domestication. Senate Bill No. 29 and companion House Bill 15 were filed in the Texas Legislature on February 27, 2025. Those bills introduce a series of corporate reforms, the most significant of which include the codification of the so-called “business judgment rule” and the permission for Texas corporations to adopt an ownership threshold that must be met for derivative claims.
And that is only the most recent step by Texas. In September 2024, Texas opened a statewide business court judicial district modeled after Delaware’s Court of Chancery to accommodate the booming corporate community in Texas, which only continues to grow due to a number of geographic and economic factors. Texas Governor Greg Abbott also recently announced the creation of the Texas Stock Exchange, which will begin facilitating trades and listings in Dallas in 2026. Nevada also has a leg in this race. Its legislature introduced Assembly Bill 239 on February 17, 2025, which, among other things, introduces new processes for reorganizations and revises processes for which a board of directors approves a plan of merger, conversion, or exchange. Notably, that bill also proposes to amend Nevada’s codification of the business judgment rule to require directors to act on an “informed basis.”
To preserve its position as the premier “home” to American corporations, the Delaware legislature is likewise proposing changes to Delaware corporate law. On February 17, 2025, it introduced Senate Bill 21. Among other things, that bill would establish:
- New safe harbor protections for directors, officers, or controlling stockholders or control groups, shielding such individuals or groups of individuals from liability if they have interests rendering them “not independent” regarding transactions or other actions taken, and terms for deeming directors and stockholders independent (see proposed revisions and amendments to § 144 of Title 8 of the Delaware Code);
- An amendment to stockholder books and records inspection rights to limit by definition the materials a stockholder may demand to inspect and to impose conditions upon bringing a demand to inspect a corporation’s books and records (see proposed revisions and amendments to § 220 of Title 8 of the Delaware Code); and
- That controlling stockholders and control groups cannot be held liable for monetary damages for breach of the duty of care (see proposed revisions and amendments to § 144(c) of Title 8 of the Delaware Code).
Among other things, these proposed changes to Delaware’s corporate law seek to ease the volume of stockholder litigation brought in the state, as well as class attorney fees resulting from any successful stockholder action. However, these proposed changes are facing substantial pushback within the state, only a few weeks after the bill’s introduction. Part of that pushback stems from the source of the bill itself — reportedly, it was quickly developed by a working group convened by Delaware’s recently elected Governor Matt Meyer, who specifically cited concern with corporate rumblings of charters moving to other states, like Texas.
Only in its infancy, Delaware’s Senate Bill 21 has already had practical effects, with a stockholder complaint filed in the Court of Chancery on February 26, 2025, alleging that the defendant corporation has strategically (but improperly) avoided direct demands for inspection of books and records in reliance on Senate Bill 21, anticipating its passage will avoid liability as to the corporation. See Assad v. Altair Engineering Inc., No. 2025-0217 (Del. Ch. Ct.).
As the discord between stockholders or other plaintiff classes affected by corporate law and corporations continues to grow within Delaware and its Chancery Court, in the midst of immense competition from Texas, Nevada, and other states, it is yet to be seen whether Delaware can maintain its position as the preeminent home for America’s corporations and, consequently, where and with what success stockholders can file and maintain actions against the corporations in which they own interests.
