DealLawyers.com Blog

I didn’t think that any controversy about proposed changes to the DGCL could top the war of words over last year’s amendments, but then the Delaware General Assembly said “hold my beer” earlier this month when it introduced Senate Bill 21. Among other things, that statute would substantially enhance the protections that boards & controlling stockholders of Delaware corporations have when engaging in transactions in which the controller has an interest.  However, in getting to that result, the proposed legislation would undo decades of Delaware precedent.

Just how much case law could be overturned by SB 21? According to a running list compiled by Columbia law professor Eric Talley, the number currently stands at a staggering 34 Delaware Supreme Court decisions! If you’re interested in following the debate over this legislation, I’ve got a few sources to point you toward:

– Over on ProfessorBainbridge.com, UCLA’s Stephen Bainbridge has been blogging up a storm on a variety of topics related to SB 21 and, as always, his thoughts are worth considering.  In particular, check out this blog laying out his preliminary reactions to the proposed legislation and this one on SB 21’s implications for conflicted transactions involving directors & officers.

– Tulane’s Ann Lipton has also devoted considerable attention to SB 21 and its implications – and she’s sharply critical of it. Check out this FT Alphaville article and this Business Law Prof Blog post.

– Anthony Rickey of Margrave Law has authored a LinkedIn article in which he reviews SB 21 and concludes that its provisions addressing controlling stockholder conflicts “will be less consequential than its proponents hope or its detractors fear.”

– While most of the attention has been focused on the proposed changes to Section 144 of the DGCL contained in SB 21, the proposed legislation also includes changes to Section 220’s provisions relating to books & records demands. Francis Pileggi has posted on that topic over on his Delaware Corporate & Commercial Litigation Blog.

– There are a handful of LinkedIn accounts I’ve been following for their analysis of SB 21. These include The Chancery Daily’s Lauren Pringle, Columbia Law School’s Eric Talley, and Equity Litigation Group’s Joel Fleming.

– We’re also posting an ever-growing collection of law firm memos on SB 21 in in our “State Laws” Practice Area.

Finally, I can’t close this blog without noting that the potential impact of SB 21 is significant enough that Delaware’s Chief Justice Seitz has taken the unusual step of weighing-in on the controversy, cautioning legislators about the need to respect judicial independence when considering actions to protect Delaware’s corporate franchise business.

– John Jenkins