OPINION
Is the Proposed Senate Bill 313 Positive Legislation for Delaware’s Corporations?
Dear Friends,
Corporate law is indeed complicated and has its confusing aspects. The Delaware Chancery Court handles disputes involving corporations in Delaware. The State of Delaware has enjoyed tremendous franchise taxes from incorporations, providing roughly 1/3 of Delaware’s income. Approximately 60% of all Fortune 500 companies and many others have incorporated in Delaware because of the Chancery Court, which was designed and is supposed to provide ultimate fairness and equitable decisions.
Over the years, this famous and omnipotent Court in my view has become jaded with certain Chancellors operating with conflicts of interest, providing unprecedented rulings, and allowing outrageous and unreasonable legal fees for certain attorneys in the amount of many millions of dollars. Famous litigator Alan Dershowitz made statements to the effect that “any attorney who advises his client to incorporate in Delaware is guilty of legal malpractice.”
Folks, I have criticized the Chancery Court and some of its Chancellors over the years, pointing out perceived conflicts of interest, unprecedented rulings, and certain inequities, especially in the incessant TransPerfect case that is still going on. Philip Shawe, CEO of TransPerfect and Elon Musk from Tesla, and many others are leaving Delaware and incorporating in other states such as Nevada and Texas because of perceived absurdities in the Chancery Court. The loss of these two companies alone, I estimate will cost Delaware over $650,000 dollars a year?!
Interestingly, the Delaware Senate is proposing SB 313, which makes some seemingly positive changes. Considering my criticism of the Chancery Court and certain Judges and Lawyers, I have been asked for my opinion of this proposed legislation from several Delaware State Senators. I have read the proposed Senate Bill, which is bipartisan and requires a 2/3-vote to pass. From my understanding — without my being specific, as to certain past cases, apparently adversely affected by how the law reads now — this proposed corporate law modifies the existing law where a Chancellor could now legitimately rule differently?
From what I have learned from my research and advice from several experienced litigators, this is a good proposed law. Therefore, I hope it passes and is signed by the Governor. Indeed, SB 313 does not solve many of the perceived issues and problems from my perspective, however this proposed legislation seems to be a good beginning. I urge the passage of this bill.
I thank those Senators who are taking this positive action to make these needed changes and their interest in making the Chancery Court operation and corporate rulings better and possibly more equitable?
That’s the way I see it. As always, your comments are welcome and appreciated.
Respectfully yours,
JUDSON Bennett-Coastal Network
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