A controversial bill in Delaware’s state Senate aims to transform the state’s corporate law, sparking opposition from investors and shareholder attorneys. The bill would alter how companies use independent directors and limit access to company records, with the aim of making Delaware a more attractive state for businesses.
However, many institutional investors and scholars argue that the bill would harm minority shareholders and allow boards and executives to prioritize their own interests over those of investors. The International Corporate Governance Network (ICGN), representing $90 trillion in combined assets under management, has spoken out against the bill, warning it could reduce shareholder rights and diminish judicial oversight.
The backlash comes after Tesla CEO Elon Musk took on Delaware’s corporate law last year, rescinding a $56 billion pay package due to a judge’s ruling. Musk smears the judge and became an outspoken critic of Delaware’s judiciary, encouraging others to follow suit. Several companies, including Dropbox, Meta, and Bill Ackman’s Pershing Square Capital, have moved their incorporation or are considering exits.
If passed by the state House and signed into law, the bill would change Delaware’s corporate law and provide clearer guidelines for independent directors and company records. However, many experts believe that the changes would reduce transparency and diminish shareholder rights, potentially harming investors who rely on these rules to protect their interests.
Source: https://www.cnbc.com/2025/03/15/after-elon-musk-delaware-exit-state-weighs-overhaul-of-corporate-law.html