Senate approves changes to Delaware corporate law to clarify director independence and books-and-records rules

DOVER, Del. — The Delaware Senate on March 13 passed Senate Substitute 1 for Senate Bill 21, a package of amendments to the Delaware General Corporation Law that sponsors said are intended to clarify when directors are treated as independent and to tighten the scope of expedited stockholder books-and-records requests.

Senator Townsend, the floor sponsor, said the measure was driven by a series of court decisions and market reactions that, he and supporters argued, had created uncertainty for companies and investors and risked eroding Delaware’s corporate-franchise advantages. "We are trying to return Delaware law to where it was 10 years ago," Professor Lawrence Hammermesh told the chamber, asking lawmakers to view the bill as a course correction.

The bill places statutory emphasis on two core principles: affirming the role of independent decision makers in transactions that present conflicts, and clarifying what documents are properly sought through the narrow, expedited books-and-records process. Under supporters’ descriptions during the hearing, the measure would preserve shareholder protections while making outcomes more predictable for planners and market participants.

Professor Lawrence Hammermesh, identified in testimony as a Delaware lawyer and law professor, said the measure would restore presumptions of director independence and require "substantial and particularized facts" to overcome that presumption. He also told senators the…