The Delaware Paradigm, Part Two: From Moelis to SB 313 and SB 21: Statutory Recalibration Without Losing the Core

Delaware’s 2024–25 high-amplitude statutory interventions—SB 313 and SB 21—were fast, sweeping, and controversial. They restored contractual pathways cut off by Moelis and rewired conflicted-transaction doctrine in ways that moved authority from courts to statute. Anchored in our IBLJ article, Part Two of this blog post explains what these statutes do and how they fit in Delaware’s long history of what we call ‘crisis capitalization’: Delaware entrenched at the public‑company core, rivals competing in controller‑centric niches. This post is current as of February 5, 2026. 

As Tornetta sharpened the doctrines of control and independence, Moelis addressed a different kind of threat to the fiduciary scaffold: expansive private ordering that undermines the statutory board authority. A pre-IPO shareholder agreement granted a founder sweeping pre-approval rights across a wide range of corporate actions and hard-wired board composition, effectively reducing the board of directors to an advisory body. Applying Section 141(a) and the Abercrombie line, the Court of Chancery invalidated provisions that re‑engineered internal governance by contract. The Court acknowledged market practice but insisted practice must yield to statutory structure unless authority is properly embedded in the charter or capital design. 

Three months after Moelis invalidated widely used stockholder agreements, Delaware enacted SB 313. The statute created Section 122(18), authorizing corporations to enter stockholder agreements that would otherwise violate Section 141(a)’s board-centric mandate. Pre-approval rights, board designation provisions, and veto mechanisms (all struck down in Moelis) became statutorily permissible.

The speed was remarkable. The Bill was introduced May 23, passed the Senate unanimously June 13, and approved by the House June 20. This timeline departed from Delaware’s traditional amendment process, which centers on the Corporation Law Section Council—a twenty-six-member body proposing carefully vetted changes. SB 313 bypassed this deliberative pathway entirely.

Chancellor McCormick wrote that the proposal ‘moved forward at a pace that forecloses meaningful deliberation’. Over fifty law professors urged allowing appellate review rather than rushing intervention. Yet the bill passed with overwhelming support, reflecting Delaware’s judgment that Moelis threatened venture capital and private equity financing structures.

SB 21: Comprehensive Restructuring of Controller Transactions

SB 21 went further. Enacted March 2025, it fundamentally restructured Delaware’s approach to conflicted transactions through several mechanisms. First, it rewrote Section 144 to provide explicit safe harbors— once specified procedures are satisfied, equitable relief is barred. Second, it relaxed MFW’s dual-protection requirement, allowing either special committee approval or majority-of-minority stockholder approval (rather than both) to cleanse controller transactions. Third, it adopted a bright-line control definition keyed to voting power: one-third for minority controllers, majority for all others. Fourth, it narrowed Section 220 books-and-records inspection by excluding director and officer communications.

The controversy was immediate. Critics labelled it the ‘billionaire’s bill’, arguing it prioritized controlling shareholders over minority protections. Records showed that February 2025 Delaware meetings included attorneys from firms representing Meta, Musk, and Tesla. A constitutional challenge is now pending, and critics estimated $117-235 million in lost economic activity statewide. Supporters, including Governor Meyer and major law firms, characterized the reforms as necessary to preserve Delaware’s competitiveness and reduce litigation uncertainty.

Crisis Capitalization as Delaware’s Pattern

Yet this isn’t Delaware’s first crisis. Our article traces a recurring pattern: the 1980s hostile takeover era generated enhanced scrutiny doctrines; 2000s federal preemption threats spurred specialized court development; 2010s appraisal arbitrage produced market-based valuation frameworks; and now the 2020s Moelis/DExit challenge has triggered SB 313 and SB 21. Each iteration strengthened Delaware’s institutional capacity while adapting to new competitive realities. 

This ‘crisis capitalization’ mechanism explains Delaware’s century-long dominance. The state doesn’t merely respond to challenges—it transforms them into comparative advantages. Enhanced scrutiny became the gold standard for defensive measures. Market-based appraisal doctrine resolved valuation uncertainties. And now, the statutory clarifications in SB 21 may reduce litigation friction while preserving core fiduciary protections.

We discussed the recent Musk decision in the first blog post.

How does the Supreme Court’s Musk decision fit the statutory arc? By choosing the narrow remedy path, the Court avoided premature hardening of control or ratification doctrine precisely as SB 21 experiments with brighter lines. It reinforced foundational equitable limits—status quo ante for rescission; plaintiff’s burden for equitable relief—while leaving room for statutory safe harbors to guide ex ante design, a complementary dual-track consistent with our account of Delaware’s adaptive capacity. This interplay preserves Delaware’s segmentation thesis: controller-heavy firms may value ex ante portals and clearer cleansing routes; widely held publics value adjudicative oversight and doctrinal depth

The broader institutional picture underscores path dependence and coordination. Delaware’s Court of Chancery continues to produce detailed, context‑rich opinions; appellate oversight trims extremes; and legislative interventions correct perceived misalignments. The Council‑mediated process has historically been a ballast; deviations from that process have sparked legitimacy concerns precisely because they risk diluting the judge‑centered product public markets prize. The Musk Supreme Court decision, in its narrowness, implicitly recenters adjudication without repudiating the legislature’s objectives. 

SB 313 and SB 21 are high-amplitude iterations of Delaware’s feedback loop that can be reconciled with the judge-centered core so long as they are carefully calibrated. The model still works when statute supplies portals and equity polices overreach. The Supreme Court’s Musk ruling is a data point for that equilibrium, not a departure from it. 

In our final post, we assess DExit narratives against empirical reality and explain why the dual‑race equilibrium—Delaware at the public‑company core, Nevada/Texas in controller niches—remains the best forecast.

The authors’ full paper can be accessed here. 

David Chekroun is a Professor of Business Law at ESCP Business School.

Megha Bansal is a J.D. candidate, NYU School of Law.

Tanya Bansal is a Law Clerk at Paul, Weiss, Rifkind, Wharton & Garrison LLP.