/>iThe Delaware General Corporation Law (DGCL) has been amended by two pieces of legislation. The first set of amendments, adopted as Senate Substitute 1 to Senate Bill 21, implement significant changes to Sections 144 and 220 of the DGCL. These amendments were signed on March 25, 2025 by the governor with immediate and generally retroactive effect1 and implement changes that relate to foundational issues that have arisen in practice and litigation over the past decade. The changes include:
- Addition of protections and safe-harbors for directors, officers, and controlling stockholders from liability for breach of fiduciary duty in connection with interested transactions.
- Limitation of stockholders’ rights related to inspection and use of corporate books and records.
At a high level, the amendments may incentivize the compliance with, and documentation of, prescribed governance practices by (1) making compliance with corporate governance standards more accessible and attractive to directors, officers, and controlling stockholders; (2) clarifying and lowering analogous standards under Delaware common law; (3) codifying the protective effects of such compliance in the DGCL; and (4) expressly identifying corporate documentation involved in obtaining the potential benefits of these amendments. From that perspective, drafting takeaways from these amendments are particularly salient. As a result of the substantial changes by these amendments, questions remain regarding how certain terms will be interpreted and applied.
The second set of amendments, adopted as Senate Bill 95 and signed on June 30, 2025 by the governor, apply to other sections of the DGCL with immediate or certain delayed effect (for the most part, effective August 1, 2025) and address issues related to forum selection provisions, Delaware state filings, and registered agents. These amendments are more technical and routine than the earlier 2025 amendments.
This GT Update discusses the impact of the legislation on corporate and M&A documents, including board resolutions, governing documents, books and records documents, and certain related drafting considerations.
