Delaware's 2025 DGCL Amendments: A Win for Managerial Power at the Expense of Stockholder Oversight?

On March 25, 2025, Delaware’s Governor signed into law Senate Bill 21 (S.B. 21), amending Sections 144 and 220 of the Delaware General Corporation Law (DGCL). Framed as a modernisation effort, the changes certainly offer greater clarity and predictability for corporations navigating conflicted transactions and stockholder inspection demands. But beneath the surface, the amendments represent a decisive shift, one that privileges managerial flexibility over the ability of stockholders to act as effective corporate monitors.

Far from a mere technical adjustment, these revisions reflect Delaware’s enduring willingness to recalibrate its corporate governance model in favor of boards and controlling stockholders, even as fiduciary duty scandals and demands for corporate accountability continue to mount globally.

A New Architecture for Conflicted Transactions — But at What Cost?

The amendments to Section 144 reorganize the treatment of conflicted transactions into three neat categories: those involving interested directors and officers (144(a)), controlling stockholders in non–going private transactions (144(b)), and controlling stockholders in going private transactions (144(c)). On paper, this codification appears to bring long-awaited structure to what has been a complex, judge-made landscape following cases like MFW and Kahn v. Lynch.

Yet the statutory safe harbors, especially for controlling stockholders, raise serious questions.

Whereas Delaware courts once vigilantly policed transactions with insiders through the demanding 'entire fairness' standard, the amendments now offer a procedural escape route. If a conflicted deal is approved by both an independent, informed special committee and a majority of disinterested stockholders, business judgment deference is restored. Courts must presume good faith unless gross negligence is shown.

This elevation of process over substance is risky. A well-orchestrated special committee and a carefully managed stockholder vote can now sanitise transactions that, on economic terms, might still be deeply unfair. Courts, traditionally the last line of defense, will find themselves disarmed if the façade of procedural propriety is maintained.

Moreover, the introduction of a heightened presumption of director independence based on exchange listing standards (with a correspondingly higher burden for plaintiffs to rebut it) effectively immunizes many directors from serious challenge. Independence, always a nuanced and context-specific inquiry in Delaware jurisprudence, now risks being reduced to a box-checking exercise.

Is this truly modernization? Or is it a retreat from substantive fiduciary accountability under the banner of procedural efficiency?

Section 220: Narrowing the Gates to Corporate Information

The amendments to Section 220 are no less striking.

For decades, Delaware has extolled the stockholder’s right to inspect corporate books and records as a critical tool for detecting fiduciary misconduct. Yet over the past few years, courts have grown wary of stockholders using Section 220 to fuel speculative litigation.

S.B. 21 responds by codifying narrow, exhaustive categories of inspectable 'books and records,' including meeting minutes, financial statements, and governance questionnaires, but notably not emails, text messages, or informal communications unless extraordinary circumstances exist. The corporation’s power to redact, limit, and condition access (including by requiring confidentiality agreements) is now expressly recognized.

While some tightening of the process was inevitable to curb abuse, these changes swing the pendulum far toward corporate secrecy. By narrowing what can be requested and imposing rigid specificity requirements, Delaware makes it significantly harder for stockholders, particularly outside activists and institutional investors, to uncover evidence of wrongdoing before filing derivative suits.

In effect, the amendments privilege corporate peace over transparency, at a time when the latter is arguably more needed than ever.

The Underlying Philosophy: Managerialism Reaffirmed

Supporters of the amendments will argue that they strike a reasonable balance: promoting efficient internal governance while preserving judicial review where process protections fail. They will note that fairness review remains available, and that intentional misconduct cannot be shielded by mere formalities.

But viewed more critically, the 2025 changes reflect Delaware’s classic managerialist instincts. They embody a worldview in which corporate boards and insiders are presumed to act loyally and competently unless overwhelming evidence proves otherwise, and where procedural compliance is deemed sufficient proof of substantive fairness.

This is not a new trend. Delaware has, since the 1980s, systematically insulated directors and controlling stockholders through doctrines like business judgment deference, exculpatory charter provisions, and the cleansing effects of independent approval. S.B. 21 simply continues that trajectory, now in statutory form.

For companies, these amendments promise greater predictability and lower litigation risk. For fiduciaries, they offer stronger procedural shields against second-guessing. But for stockholders, particularly those without inside access to governance processes, the road to accountability has grown steeper.

What Lies Ahead?

It is one thing to codify procedural clarity; it is another to entrench proceduralism as a substitute for substantive fiduciary review. Delaware’s amendments are certain to generate waves of litigation in the coming years, as plaintiffs probe the meaning of 'good faith', 'gross negligence', and 'independence' under the new standards.

Moreover, corporations operating under federal securities laws must remain cautious. No amount of procedural compliance under Delaware law can insulate companies from potential liability under the federal proxy rules, fiduciary duty disclosures, or SEC investigations into governance failures.

Perhaps most critically, Delaware risks sharpening the criticisms that have long haunted its dominance in corporate law: that it caters too heavily to corporate insiders at the expense of meaningful accountability.

As other jurisdictions, from New York to California to Europe, rethink the balance of power within corporations, Delaware’s 2025 amendments may prove to be both a strategic consolidation of its franchise, and a provocation for its critics.

The core question remains: can a governance regime that increasingly prizes form over substance truly sustain corporate legitimacy in an age of transparency, activism, and rising expectations of fiduciary responsibility?

Tejas Sateesha Hinder is a Legal Associate at Cyril Amarchand Mangaldas.