Yesterday, the Delaware Supreme Court agreed to accept questions certified to the court relating to the constitutionality of Senate Bill 21 (SB 21), which was signed into law back in March 2025. 

SB 21 implemented important changes to §§144 and 220 of the Delaware General Corporation Law, largely in response to certain controversial Delaware Court of Chancery decisions, which led to a number of high-profile companies reincorporating (or considering reincorporation) to other states and formation-stage founders questioning the state for initial incorporation. 

The amendments to § 144 provide safe harbor protections for related-party (interested) transactions with directors, officers, controlling stockholders, and members of a control group, including providing specific processes for approval of such transactions and a path for ratification by stockholders after the fact in some circumstances. They also lower the requirements for approving these acts and transactions.

The amendments to § 220 provide more clarity with respect to the scope and requirements for a stockholder inspection of books and records, providing an exclusive list of items that may be requested (narrowing the universe awarded in some Section 220 cases), raising the procedural requirements for such demands, and allowing corporations to impose confidentiality restrictions.

The amendments, which were first introduced on February 17, 2025, became immediately effective upon the governor’s signature, and apply to all prior and future acts and transactions, but do not apply to court proceedings that were pending or completed on or before February 17, 2025, or to stockholder demands to inspect books and records made on or prior to that date.

While some view the amendments as a much-needed rebalancing of shareholder and management rights, others see them as an overreaction, a direct rebuke of the Delaware judiciary, and an attack on the rights of minority investors. Opponents of the bill have dubbed SB 21 the “billionaire’s bill.”

Specifically, the Delaware Supreme Court will consider the following questions related to SB 21:

1. Does § 1 of SB 21, codified as 8 Del. C. § 144—eliminating the Court of Chancery’s ability to award “equitable relief” or “damages” where the Safe Harbor Provisions are satisfied—violate the Delaware Constitution of 1897 by purporting to divest the Court of Chancery of its equitable jurisdiction?
2. Does § 3 of SB 21—applying the Safe Harbor Provisions to plenary breach of fiduciary claims arising from acts or transactions that occurred before the date that SB 21 was enacted—violate the Delaware Constitution of 1897 by purporting to eliminate causes of action that had already accrued or vested?

As noted in the order, the certified questions arise from a May 6, 2025, derivative action filed in the Court of Chancery on behalf of Clearway Energy, Inc., although the bill’s constitutionality has been challenged in a number of other recent cases. 

In the order, Chief Justice Collins J. Seitz, Jr. notes that “there are important and urgent reasons for an immediate determination of the questions certified.”

The announcement comes at a critical time for Delaware as more and more companies are questioning their continued domicile in the state, particularly in light of innovative changes being made by other states vying to compete with Delaware in this space, particularly Nevada and Texas, which have each recently adopted amendments to their corporate codes designed to appeal to boards, management and controlling stockholders.