DealLawyers.com Blog

Last night, the Delaware Legislature passed the controversial 2024 amendments to the DGCL and sent the legislation to Gov. John Carney for signature. Whatever the legislation’s merits may be, it would make sweeping changes to Delaware’s statutory corporate governance structure and create a number of thorny issues for the Chancery Court to work through. One respected commenter warned that the legislation could also backfire on the state. Here’s an excerpt from a Delaware Business Times article on the Legislature’s action:

Charles Elson, who founded the University of Delaware’s Weinberg Center for Corporate Governance and has served on several board of directors and advised many others, testified a third time before legislators that he thought SB 313 would threaten Delaware’s dominance in corporate litigation matters.

“This kind of revision hasn’t taken place since the 1980s, and that took two years of back and forth and compromise. This has taken two months, and I don’t believe there’s significant enough debate or attempts to compromise,” he said. “Decisions on corporate law should not be a ballgame, because it’s our bread and butter … It constitutes 67% of our revenues, and it’s the reason we don’t have a sales tax.”

Supporters of the legislation include former Chancellor William Chandler, who expressed his faith in the Delaware Corporate Law Council, which drafted the legislation.  According to the Business Times article, he warned legislators that if the amendments didn’t pass, “[t]he headlines will read that two judges and a lot of law professors succeeded in convincing [legislators] to vote down changes to corporate law that would have preserved the continuity and stability that we have known.” 

Former Chancellor Chandler also called out Chancellor McCormick and Vice Chancellor Laster for their public participation in the debate over the legislation.  Here’s another excerpt from the Business Times article:

“As chancellor, I was taught that judges need to stay in their lane and need to be applying the law [legislators] give them,” Chandler said. “Judges don’t need to intrude upon the process of law, because if they do they become the makers as well as the appliers.”

As plaintiffs’ lawyer Joel Fleming pointed out on Twitter, that’s a lesson that the former Chancellor apparently neglected to pass on to his immediate successor. It’s also a message that many other members of the Delaware judiciary who, over the years, have written articles, given speeches and provided other extra-judicial commentary to influence the course of Delaware law, apparently never received.

– John Jenkins