{"id":23266,"date":"2025-03-20T18:39:03","date_gmt":"2025-03-20T18:39:03","guid":{"rendered":"https:\/\/www.insurancejournal.com\/?p=816390"},"modified":"2025-03-20T18:39:03","modified_gmt":"2025-03-20T18:39:03","slug":"delaware-corporate-law-reform-heads-to-final-vote-amid-criticism-it-favors-billionaires","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2025\/03\/20\/delaware-corporate-law-reform-heads-to-final-vote-amid-criticism-it-favors-billionaires\/","title":{"rendered":"Delaware Corporate Law Reform Heads to Final Vote Amid Criticism It Favors Billionaires"},"content":{"rendered":"<div><img decoding=\"async\" src=\"https:\/\/www.insurancejournal.com\/img\/social\/opengraph\/ij-social-default-1200x630.png\" class=\"ff-og-image-inserted\"><\/div>\n<ul class=\"nav nav-tabs tabs tabs-entry\">\n<li class=\"active\"><a href=\"https:\/\/www.insurancejournal.com\/news\/east\/2025\/03\/20\/816390.htm\">Article<\/a><\/li>\n<li><a href=\"https:\/\/www.insurancejournal.com\/news\/east\/2025\/03\/20\/816390.htm?comments\" rel=\"nofollow\">0 Comments<\/a><\/li>\n<\/ul>\n<div class=\"article-content clearfix\">\n<p class=\"reuters\">Delaware lawmakers are expected to vote as soon as next week to overhaul the state\u2019s corporate law to protect its business-friendly reputation, but opponents have called the bill a giveaway to billionaires.<\/p>\n<p>The bill makes it hard for investors to sue over certain transactions involving controlling shareholders, such as buying a controlling shareholder\u2019s business, if the deal follows certain steps. It also applies to deals with board members and executives, but will not impact existing rules for a takeover of the company by the controlling shareholder.<\/p>\n<div class=\"bzn bzn-sized bzn-intext\">\n<ins data-revive-zoneid=\"79\" data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>The proposed legislation has politicized the normally sleepy annual process of tweaking the state\u2019s corporate code. Attorneys who represent shareholders have dubbed it \u201cthe billionaire\u2019s bill\u201d and have launched a public campaign against it.<\/p>\n<p>Opponents had expected a vote on Thursday, although the leadership of Delaware\u2019s House of Representatives had not committed to a schedule. A spokesperson for the House Democrats, who control the chamber, said a vote is now likely on Tuesday but could change, and sources said both sides were trying to line up support. Two-thirds of House members must approve the bill for it to pass. Delaware\u2019s Senate approved the bill last week and Governor Matt Meyer has said he will sign it.<\/p>\n<p>The <a href=\"https:\/\/www.reutersconnect.com\/all?search=all%3AL6N3P80KK&amp;linkedFromStory=true\">bill<\/a>, known as SB 21, is being considered amid concerns of a \u201cDExit\u201d stampede by companies from one of the country\u2019s smallest and least populated states. While other states are <a href=\"https:\/\/www.reutersconnect.com\/all?search=all%3AL6N3PP0YR&amp;linkedFromStory=true\">trying to attract<\/a> incorporations, Delaware still remains home to most large public companies and related fees generate 20% of its budget revenue.<\/p>\n<p><a href=\"https:\/\/www.insurancejournal.com\/news\/national\/2025\/03\/13\/815392.htm\">Delaware Aims to Remain Top US Corporate Home; Texas Marshals a Challenge<\/a><\/p>\n<p>Several companies, mostly with controlling shareholders, have said they might or will leave Delaware, including Dropbox DBX.O, <a href=\"http:\/\/reuters.com\/technology\/meta-talks-reincorporate-texas-or-another-state-exit-delaware-wsj-reports-2025-01-31\/\">Meta Platforms<\/a>META.O, <a href=\"https:\/\/www.reutersconnect.com\/all?search=all%3AL1N3OV1FE&amp;linkedFromStory=true\">Tripadvisor<\/a>TRIP.O and President <a href=\"https:\/\/www.reuters.com\/world\/us\/donald-trump\/\">Donald Trump\u2019s<\/a> media company.<\/p>\n<p>Amy Simmerman, a corporate lawyer in Wilmington, told the Delaware House Judiciary Committee, which approved the bill on Wednesday, that she has 15 significant corporate clients that were considering leaving the state. \u201cThis is serious,\u201d said Simmerman, who declined to identify the clients. \u201cI don\u2019t think it\u2019s just bluffing.\u201d<\/p>\n<p><strong>\u2018THIS IS APPALLING\u2019<\/strong><\/p>\n<p>Under the proposed bill, if a deal is approved by a board committee that has a majority of independent directors or by a vote by public shareholders, investors cannot challenge it in court. Currently, litigation can only be avoided if both steps are used and the committee must be entirely made up of independent directors.<\/p>\n<p>The bill also makes it harder to challenge whether a director is independent. It defines \u201ccontrolling shareholder\u201d and limits records available to shareholders who want to investigate a deal for conflicts.<\/p>\n<div class=\"bzn bzn-sized bzn-intext-2\">\n<ins data-revive-zoneid=\"162\" data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>At the committee hearing on Wednesday, lawmakers focused largely on the risk of companies leaving Delaware. Witnesses included corporate lawyers, law professors and a former judge on the state\u2019s Court of Chancery, its business court, and mostly spoke in support of the bill.<\/p>\n<p>Public comment was dominated by opposition from attorneys for shareholders who said they were excluded from the drafting process. They described the changes as radical, rushed and corrupt.<\/p>\n<p>Joel Fleming, a lawyer who represents shareholders, told lawmakers the bill was a result of lobbying by Meta Platforms and would protect its CEO and controlling shareholder Mark Zuckerberg from potential liability that shareholders are currently investigating. CNBC published documents on Wednesday which it obtained from an open records request showing that Meyer, a Democrat, met with Meta officials in the weeks leading up to proposal of the bill.<\/p>\n<p>\u201cThose claims may now be dead,\u201d Fleming told the lawmakers. \u201cThis is appalling.\u201d<\/p>\n<p>Meyer\u2019s spokesperson Mila Myles said the governor met with Meta representatives to discuss corporate law but noted that the company did not lobby for the bill. She said the governor has been \u201cmeeting with everyone\u201d to ensure the state remains a global leader.<\/p>\n<p>Meta declined to comment.<\/p>\n<p>Corporate leaders have expressed frustration in recent years over court rulings that upset certain expectations about the state\u2019s law. Tech billionaire <a href=\"https:\/\/www.reuters.com\/business\/elon-musk\/\">Elon Musk<\/a> fueled the debate last year by urging companies to follow Tesla TSLA.O and leave the state after a Delaware judge <a href=\"https:\/\/www.reutersconnect.com\/all?search=all%3AL1N3EL2FP&amp;linkedFromStory=true\">rescinded<\/a> his $56 billion pay package as CEO of the electric car maker.<\/p>\n<p><em>(Reporting by Tom Hals in Wilmington, Delaware;Editing by Noeleen Walder, Diane Craft and Paul Simao)<\/em><\/p>\n<\/p><\/div>\n<div class=\"article-poll\" data-post=\"816390\">\n<div class=\"article-poll-vote\">\n<p>Was this article valuable?<\/p>\n<\/p><\/div>\n<div class=\"article-poll-feedback voted-no\">\n<form class=\"feedback-form\">\n<p>Thank you! 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