A Deep Dive into Delaware’s Senate Bill 21
By Christian Bongiorno
In March 2025, Delaware lawmakers voted on a bill intended to protect Delaware’s business-friendly reputation (Hals 2025). Senate Bill 21 was passed in Delaware’s house later in the month after a unanimous vote in the state Senate. Governor Matt Mayer argued that Senate Bill 21 would “ensure clarity and predictability, balancing the interests of stockholders and corporate boards” (Annunziata et. Al 2025). Delaware’s recent legislation also helps corporations defeat stockholder litigation at the pleadings stage and preserves the balance between corporate officers and directors “acting in good faith” (Annunziata et. Al 2025). This bill has been subject to controversy despite its objective to preserve the state’s corporate reputation.
Senate Bill 21 serves as a complete overhaul to Delaware’s corporate landscape – Senate Bill 21 will make it difficult for investors to sue over transactions involving controlling shareholders and challenge whether a director is independent (Hals 2025). Critics quickly opposed these legislations since they believe that powerful shareholders are in the driver’s seat (Baker and Owens 2025). Rep. Frank Burns (D-Newark) claimed that his amendment would “ensure that the bill would not be perceived as allowing Meta to dodge lawsuits” (Baker and Owens 2025). Burns is expressing his skepticism behind Delaware’s legislation because it would allow major corporate leaders to be in the driver’s seat, making them feel “above” everyone. This would cause erosions in Delaware’s corporate governance because corporate insiders could invade accountability and deny shareholders of valuable information that can be used to dispute decisions (Watson 2025). Senate Bill 21 specifically limits what shareholders can request access to, this includes charters, bylaws or stockholder meeting minutes (Gaskin 2025); a 33.33% ownership threshold is required for one to be considered a controlling stockholder in a corporation (Gaskin 2025).
Meta got into legal issues in October 2022 when James McRitchie, a Meta stockholder, sued the company for compromising their fiduciary duties (Farley et Al 2024). McRitchie asserted that Delaware corporate law “should require that directors owe fiduciary duties to diversified investors, and that directors must consider external factors on society and the economy as a whole” (Farley et Al 2024). McRitchie is implying that directors should act “in good faith” to maintain positive relationships with investors and not think for themselves when making executive decisions. The case got dismissed in April 2024 when Vice Chancellor Laster revealed that Delaware’s corporate law requires directors to owe stockholders of a specific organization fiduciary duties (Farley et Al 2024).
Senate Bill 21 will have long term effects on Delaware; economist Joseph Mason discovered the economic effects Senate Bill 21 would have on Delaware’s economy. Mason found that Delaware could lose $117 million in economic activity and up to 900 jobs statewide (Mason 2025); in addition, Mason estimates a $107.5 million revenue reduction from fiduciary duty litigation (Mason 2025). Chances for a recession in Delaware exist due to the losses in activity, but the bill would help other companies remain in state because of its current tax laws and legal system. Domestic and foreign corporations are required to pay an 8.7% tax towards federal taxable income while the legal system offers numerous benefits – these benefits include efficient dispute resolution and a specialized court for corporate affairs. Examples of financial corporations that are thriving in Delaware include Bank of America, Barclays and Capital One.
Time would tell if this legislation would yield drastic consequences for Delaware, but directors must realize that they need to see the bigger picture before making drastic decisions.
Hals, T. (2025) Delaware Corporate Law overhaul heads to final vote amid criticism it favors billionaires, Yahoo! Finance. Available at: https://finance.yahoo.com/news/delaware-lawmakers-vote-corporate-law-101711374.html (Accessed: 30 May 2025).
Baker, K. and Owens, J. (2025) Meyer signs controversial Senate bill 21 into law after bitter house debate , Spotlight Delaware. Available at: https://spotlightdelaware.org/2025/03/26/meyer-signs-senate-bill-21/ (Accessed: 30 May 2025).
Watson, M. (2025) Understanding Delaware’s Senate bill 21 and the growing opposition, Deminor . Available at: https://www.deminor.com/en/news-insights/understanding-delawares-senate-bill-21-and-the-growing-opposition/ (Accessed: 30 May 2025
Mason, J. (2025) Viewpoint: SB 21 could cost Delaware Millions, Delaware Business Times. Available at: https://delawarebusinesstimes.com/news/viewpoint-sb21-could-cost-millions/ (Accessed: 30 May 2025).
Annunziata, M. et al. (2025) Delaware changes its corporate law: What litigators and clients need to know about Senate bill 21: Insights: Mayer Brown, Insights | Mayer Brown. Available at: https://www.mayerbrown.com/en/insights/publications/2025/04/delaware-changes-its-corporate-law-what-you-should-know-about-senate-bill-21 (Accessed: 30 May 2025).
Farley, R. et al. (2024) Court dismisses stockholder suit against Meta: Affirms a firm-specific model of corporate management, Kramer Levin. Available at: https://www.kramerlevin.com/en/perspectives-search/court-dismisses-stockholder-suit-against-meta-affirms-a-firm-specific-model-of-corporate-management.html#:~:text=On%20April%2030%2C%202024%2C%20the%20Delaware%20Court%20of,board%20of%20directors%20and%20company%20founder%2C%20Mark%20Zuckerberg. (Accessed: 30 May 2025).
Gaskin, J.L. (2025) Inside Delaware ‘billionaire’s Bill’ [Q&A], Corporate Compliance Insights. Available at: https://www.corporatecomplianceinsights.com/inside-delaware-billionaire-bill/ (Accessed: 30 May 2025).