OPINION
Delaware Lawmakers Pass Senate Bill SB21 To Try to Keep Big Companies From Leaving America’s First State
Dear Friends,
The Delaware legislature passed Senate Bill 21, designed to keep large companies from leaving after many have left in recent years. It’s a signal to the companies incorporated in America’s First State that the legislature is willing to take action to try to clean up what has become a giant mess, sadly, because of the Delaware Chancery Court.
This is not a solution that clears what Andre Bouchard and Leo Strine unleashed onto our state and that Chancellor Kathaleen McCormick continues to this day, in my view. I do commend our legislators and Governor Matt Meyer for taking action to try to stop what I see as cronyistic behavior that has caused companies like Tesla and TransPerfect to leave.
See the recap on this from Professor Robert Andreson below. He wrote this on X, formerly known as Twitter, after the news broke. Let me know your thoughts. Your feedback is always welcome and appreciated.
Respectfully Yours,
JUDSON Bennett–Coastal Network
Here’s the latest from Robert Anderson, Professor of Law at the University of Arkansas. He posted this on X:
The Delaware legislature has passed the most sweeping legislative overhaul of fiduciary duty in its history. SB 21 now heads to the Governor’s desk for signature. Through watching this process, I developed a new appreciation for the commitment of the Delaware legislature to preserving its corporate franchise. As many have noted, the state’s small size makes it dependent on the franchise in a way that ensures its legislature will be responsive to the needs of companies incorporated there. The changing politics of the state may pose a challenge for that commitment in the future. But for now the legislature has sent a strong signal that it listens to the companies that are incorporated there. The court system is still a challenge in Delaware, with no obvious direct solution.
The Court of Chancery, which was always Delaware’s cachet that no other state could replicate, is now a potential liability.
The Supreme Court is a check, but it’s inconsistent in its oversight. With the legislature having demonstrated its commitment to keeping companies in the state, the proverbial ball is now in the Supreme Court’s–uh–court to show that all three branches are united in commitment to keeping companies incorporated in the state. The most important test for the Supreme Court is the Tornetta v. Musk appeal. It won’t be easy because of the public pressure but the Court must reverse the wrong that was done by the Court of Chancery and do protect the state’s future, proving that Delaware still stands for predictability and certainty by honoring the (twice) expressed will of Tesla shareholders.
Some people won’t give Delaware credit for anything. The legislature didn’t get distracted by all the side quests proposed by special interest groups. They just did the job that they’re expected to do to keep their incorporation business going.