In a move sparking cheers from corporate boardrooms and outrage from shareholder watchdogs, Delaware lawmakers have passed a sweeping change to the state’s corporate code—one that opponents claim hands billionaires the keys to the kingdom while leaving ordinary investors out in the cold.
The legislation, SB 21, now awaiting Governor Matt Meyer’s signature, is being sold as a lifeline to the state’s multi-billion-dollar corporate franchise. But critics are calling it exactly what it looks like: a protective shield for controlling shareholders like Mark Zuckerberg, allowing insider deals to sail through with minimal interference from minority investors or the courts.
At the heart of the bill lies a controversial provision: if a board committee stacked with independent directors or a majority of public shareholders approves a deal—like selling company assets to a controlling owner—then that transaction is essentially immune from legal challenge. It’s a setup that critics argue invites conflicts of interest while making it nearly impossible for regular shareholders to push back.
Supporters frame the bill as necessary to stop a growing corporate exodus—dubbed “DExit”—that threatens Delaware’s reputation as the nation’s business capital. With the state pulling in over $2.2 billion annually from its corporate registry, lawmakers emphasized the financial stakes. “What seems permanent can easily vanish,” warned Representative Krista Griffith.
But for many, the law smells more like panic than prudence.
Dropbox, Meta, Tripadvisor, and even Donald Trump’s media venture have either flirted with or committed to leaving Delaware. And just last week, Simon Property Group sought shareholder approval to ditch Delaware in favor of Indiana.
Opposition came in loud and sharp. A billboard truck featuring Elon Musk wielding a chainsaw circled Legislative Hall as lawmakers prepared to vote. Former SEC Commissioner Robert Jackson told legislators the investor backlash to SB 21 has been “surprisingly negative,” and warned it could push even more companies away from Delaware.
Pension fund managers and shareholder advocates lined up against the bill, arguing it guts investor protections in favor of consolidating power at the top. One particularly hot-button feature: the law applies retroactively to February 17, shielding past actions from scrutiny—such as potential claims against Meta’s board.
Efforts to soften the bill with amendments—including a bid to scrap the retroactive clause—were swiftly shot down.
Corporate executives, frustrated with recent court rulings that upset long-standing assumptions about Delaware’s laws, have found an unlikely mascot in Elon Musk. After a Delaware judge voided his massive Tesla pay package, Musk began urging companies to flee the state. SB 21 appears to be Delaware’s counterpunch.
Whether it’s enough to stop the bleeding—or just the beginning of a bigger rift between corporate America and investor rights—remains to be seen. But one thing’s certain: Delaware just drew a line in the sand, and not everyone’s standing on the same side.
