Delaware’s recent legislative amendments, encapsulated in Senate Bill 21 (S.B. 21), have introduced significant changes to the state’s corporate law, particularly concerning safe harbor provisions for transactions involving interested directors, officers, and controlling stockholders. These provisions have been met with both support and constitutional scrutiny.
In response to challenges questioning the constitutionality of S.B. 21, three amicus briefs have been filed, each advocating for the law’s validity. The briefs collectively argue that the Delaware General Assembly acted within its authority in enacting S.B. 21 and that the legislation serves to reinforce Delaware’s status as a premier jurisdiction for corporate incorporation.
S.B. 21 amends Section 144 of the Delaware General Corporation Law (DGCL) to provide clear safe harbor procedures for transactions involving potential conflicts of interest. Specifically, the amendments stipulate that such transactions are protected if they receive approval from a majority of disinterested directors or are ratified by a majority of disinterested stockholders, provided that all material facts are disclosed. This codification aims to offer clarity and predictability in corporate governance, addressing ambiguities that previously existed in the law. ([corpgov.law.harvard.edu](https://corpgov.law.harvard.edu/2025/04/01/delaware-enacts-important-corporate-law-reforms/?utm_source=openai))
Despite these clarifications, the legislation has faced legal challenges. In June 2025, the Delaware Chancery Court certified two questions to the Delaware Supreme Court regarding the constitutionality of S.B. 21. The questions focus on whether the law infringes upon the Court of Chancery’s equitable jurisdiction and whether it retroactively eliminates vested causes of action. ([dandodiary.com](https://www.dandodiary.com/2025/06/articles/corporate-law/s-b-21-constitutionality-questions-certified-to-del-supreme-court/?utm_source=openai))
The amicus briefs submitted in support of S.B. 21 contend that the General Assembly did not overstep its constitutional bounds. They emphasize that the amendments are consistent with Delaware’s legislative authority to define and regulate corporate law. Furthermore, the briefs argue that S.B. 21 enhances Delaware’s appeal as a corporate domicile by providing statutory clarity and reducing litigation risks associated with conflicted transactions.
As the Delaware Supreme Court prepares to address these constitutional questions, the outcome will have significant implications for corporate governance practices and the legal landscape in Delaware. The court’s decision will determine the extent to which the safe harbor provisions of S.B. 21 can be utilized by corporations to mitigate liability in transactions involving interested parties.