Yesterday, Delaware State Senator Bryan Townsend introduced a sweeping set of amendments to the Delaware General Corporation Law. If adopted, these measures would mark the most significant single-year revision of Delaware’s corporate code since at least 1967, reshaping everything from how controlling stockholders negotiate major transactions to the mechanics of derivative litigation and shareholder access to corporate records. Ordinarily, reforms of this magnitude pass through the deliberate, consensus-driven process of the Delaware Bar’s Corporation Law Council. This time, however, the route appears more compressed. What prompted such an expansive proposal, why now—and why so abruptly?

The stakes are high. Delaware’s corporate law has historically thrived on a careful balance of flexible statutes and judge-made nuance. Now, that balance looks primed to shift in ways that could narrow judicial oversight, empower controllers, and constrain shareholder enforcement.

Without taking sides on the wisdom of these changes, this post lays out their substantive character and their far-reaching significance. The reforms primarily concern two core provisions of the DGCL: Section 144, governing conflicted transactions, and Section 220, which regulates shareholder access to corporate books and records. Yet their impact runs deeper than mere technical revisions—they raise existential questions about Delaware’s future as the leading domicile for U.S. corporations.

If you’ve been tuning out corporate law updates, this is the moment to check back in. In what follows, we break down the amendments themselves and—just as importantly—offer a deeper analysis of what this legislative pivot may mean for Delaware’s long-standing equilibrium and for the parties who depend on its well-honed governance system. Let’s begin with the substance.

Proposed Amendments to DGCL Section 144

1. Overturning Match Group: Lowering the Standard for Controller Transactions. Under Match Group, all controlling stockholder transactions must satisfy all six MFW procedural protections—or face entire fairness review. The proposal rewrites that rule: It applies MFW only to so-called “controller takeovers” (mirroring the original MFW), and even then jettisons crucial MFW features such as full independence of the committee and ab initio procedures. In practical terms, going-private deals no longer need to be conditioned on both cleansing mechanisms from the outset, and the committee need only be “majority disinterested” (explained below). For all other controlling-stockholder transactions, the standard is also lowered:
   • The special committee does not have to be fully independent, only “majority disinterested.”
   • The stockholder vote counts only votes actually cast, so abstentions do not act as opposition.
   • Either committee approval or stockholder approval suffices—no need to secure both.

This is a major departure from Match Group and fundamentally reduces the scrutiny applied to controller transactions.

2. Defining “Controlling Stockholder” with a 33.33 percent Threshold. Delaware courts have recognized controllers below 33.33 percent when they exert “actual control.” The proposal imposes a bright-line rule: A stockholder is a controller only if the stockholder owns a majority or holds at least one-third plus managerial authority equivalent to a majority owner. This will exclude some major stockholders (20–33 percent) from controller scrutiny, even if they exercise significant influence. Notably, it undermines cases like Tornetta v. Musk(2024), where Elon Musk was deemed a controller at just 21 percent. Under this rule, he would not have been classified as a controller at all.

3. Presumption of Independence for Exchange-Listed Directors. A director deemed independent under NYSE/Nasdaq rules is now presumed disinterested unless strong, particularized evidence proves otherwise. Additionally, a director’s nomination by an interested party does not, by itself, suggest the director is interested. This directly counters cases like Goldstein v. Denner, where a director’s controller-backed nomination played a key role in determining that the director wasn’t independent. This change makes it harder to challenge director independence.

4. “Fair as to the Corporation” Defined. The proposal defines fairness as a transaction that provides a benefit to the corporation or stockholders and is comparable to what might have been obtained in an arm’s-length deal. This codifies the two-pronged fairness test (fair price + fair process) but lacks detail compared with decades of entire-fairness jurisprudence. It leaves open several questions: How “comparable” must the deal terms be? What evidence satisfies this? Courts will likely need to interpret these gaps in future litigation.

5. New Definitions of “Material Interest” and “Material Relationship.” For directors, a material interest or material relationship is anything that reasonably impairs their objectivity. For stockholders, it’s defined more broadly as anything material to them personally. This replaces the fact-intensive, contextual analysis of director independence from Beam v. Stewartand In re Oracle with simplified statutory definitions. Courts may now be less willing to find conflicts unless the impairment is explicit and significant. This could potentially limit challenges to board independence. 

Proposed Amendments to DGCL Section 220

1. Narrowing the Scope of “Books and Records” Requests. The proposal limits what qualifies as corporate “books and records” under DGCL Section 220 to a specific, exhaustive list—charters, bylaws, stockholder meeting minutes, communications to stockholders, board minutes, board materials, annual financial statements, and agreements under Section 122(18). This restricts what stockholders can request in a 220 demand, potentially excluding emails, text messages, or informal board communications, which have become central to derivative litigation.

2. Imposing a Three-Year Lookback Period. Stockholder access to records is now capped at three years—meaning any demand can only cover documents created within that timeframe. This limits the window for stockholder investigations, particularly in long-running governance disputes or cases where corporate misconduct surfaces years after the fact.

3. Raising Procedural Hurdles for Stockholder Demands. The amendments impose stricter procedural requirements: A demand must state a proper purpose, describe it with reasonable particularity, and show that the requested materials are “specifically related” to that purpose. This raises the bar for shareholders seeking information, giving corporations more grounds to resist requests by arguing they aren’t narrowly tailored or don’t meet the heightened standard.

4. Allowing Corporations to Impose Confidentiality Restrictions. Corporations can now mandate confidentiality for produced records and require shareholders to incorporate them by reference in any lawsuit based on the demand. This discourages fishing expeditions and limits strategic use of 220 materials.

5. Courts Retain Some Discretion—But With Constraints. The proposal confirms that courts can still compel production in litigation or impose reasonable limits—but only if the stockholder meets the new statutory requirements. This preserves some judicial oversight but signals to the Court of Chancery that Delaware wants to tighten stockholder access, which could change how courts approach 220 disputes going forward.

Analysis

Few moments in Delaware’s storied corporate history have arrived quite like this one. All at once, we’re seeing a broad legislative package that cuts across foundational doctrines—controller conflicts of interest, derivative litigation, access to corporate records—and does so with a speed and scope that contrasts starkly with the state’s long tradition of incremental, consensus-based reform. For better or worse, the tide has turned, and these amendments are poised to reshape the very equilibrium that has made Delaware the unrivaled home for U.S. incorporations.

At first blush, the motive is straightforward: Some argue that Delaware needs to respond aggressively to a mounting fear of “Delaware exit,” a scenario in which founder-led or controller-dominated firms, chafing under perceived judicial scrutiny, might pick up their charters and reincorporate elsewhere.

The impetus for that fear is not wholly imagined. Judges have recently shown a willingness to look deeply into sensitive transactions and demand robust procedural compliance, especially when dealing with controlling stockholders. High-profile rulings—and direct judicial engagements with the legislature—have rattled some corners of the defense bar. Whether “DExit” is truly imminent or just rumor, Delaware evidently feels compelled to lay all its cards on the table in one sweeping legislative flourish.

That flourish, however, reaches beyond a mere restoration of “balance” or “predictability.” It systematically recalibrates entire fairness for controller deals, narrows which transactions even count as controller conflicts, and codifies new definitions of “disinterestedness” that, for some observers, will push Delaware law further toward the side of managers and controlling stockholders.

Most striking of all is the speed with which this is happening—circumventing the usual measured processes of the Delaware Bar’s Corporation Law Council and the typical stakeholder buy-in. We’ve seen something like this before: Back in the mid-1980s, when Smith v. Van Gorkom unleashed a torrent of anxiety about director liability, the Delaware legislature reacted swiftly with Section 102(b)(7). That, in turn, cemented Delaware’s primacy. Will history repeat itself?

Skepticism is warranted because times have changed. In the 1980s, there was not the same level of friction between key constituencies, nor was there the same global competition for business charters. The intangible “Delaware brand” is no longer secured merely by piling on more liability shields. Instead, many companies choose Delaware because of the network benefits—predictable jurisprudence, specialized courts, developed precedent—that come from thousands of similarly situated corporations all subject to the same matrix of statutory and case law.

If these new reforms, ironically, diminish judicial oversight or hollow out the disinterested-committee concept, they might inadvertently sap what truly sets Delaware apart: a flexible, nuanced, judge-made approach that refines fiduciary principles over time. What remains may be a more rigid, top-down code that invites further legislative tinkering every time dissatisfaction bubbles up.

Yet some will argue that this is precisely what the moment demands—perhaps rightly so. Controllers, especially those running high-profile tech or founder-led firms, have threatened to move elsewhere. Large law firms, attuned to that sentiment, are nudging the legislature to act. The fear is that if Delaware sits on its hands, high-innovation companies might find “friendlier” jurisdictions.

But that logic cuts both ways. Delaware’s entire franchise relies on trust—that minority investors won’t be trampled and that controversies will be resolved with sophisticated equity-based jurisprudence. If these reforms are seen as a step too far in curtailing minority or derivative suits, it could fracture that trust and open the door to alternative states (or even foreign jurisdictions) offering a more balanced environment. The result could be the very exodus the legislature had hoped to avoid.

Let’s be clear: These amendments amount to a direct rebuke of the Delaware judiciary. They impose a legislative clampdown on the very judicial discretion that, for decades, has defined Delaware’s distinctive brand of corporate governance. Critics of Chancery may celebrate the move, but in doing so they risk undermining Delaware’s greatest asset: the feedback loop between sophisticated litigation and careful case-by-case refinement of fiduciary law.

Surrogating that organic development with rigid statutory definitions might yield near-term comfort—narrower definitions of “controller,” more lenient thresholds for cleansing conflicts—but in the longer run, it’s not obvious that a “check-the-box” system fosters the same sense of dynamic equilibrium that has underpinned Delaware’s century-long hegemony. One wonders whether this legislative pivot might be the apex of a shift away from the state’s tried-and-true formula, and thus the beginning of an unraveling.

For now, the only certain takeaway is that Delaware stands on the precipice of a full-blown recalibration. If adopted, the potential ramifications will not be fully felt overnight. Practitioners will scramble to interpret new definitions of “disinterestedness,” stockholder-plaintiffs will test the narrower 220 regime, and the Court of Chancery will attempt to reconcile its prior doctrines with the newly circumscribed statutory mandates. All the while, out-of-state critics will watch for cracks in the Delaware façade.

The broader lesson, if history is any guide, is that a legislative revision of this magnitude rarely solves tensions so much as it reconfigures them. Whether that reconfiguration cements Delaware’s future or inadvertently erodes it is the existential question. We can only hope the legislature’s sense of urgency and the bar’s abiding respect for Delaware’s tradition will combine to produce results that protect the state’s precarious leadership. Otherwise, the unstoppable network effect that once brought everyone to Delaware might just discover a new, equally powerful reason to leave.

This post comes to us from professors Eric Talley at Columbia Law School, Sarath Sanga at Yale Law School, and Gabriel V. Rauterberg at the University of Michigan Law School.