SB 21 Billionaires’ Bill Passes in Delaware: Protecting the Largest Voices in a Company

Last week, Delaware lawmakers voted on State Bill 21 (SB 21) that favors big businesses in the area. The ‘billionaires’ bill’ intends to protect its business-friendly reputation, but opponents have called the bill a giveaway to the wealthiest and largest voices within the state.[1]

The bill was introduced to help maintain Delaware’s state economy and prevent some larger firms from leaving by conceding to some big business interests. This fear of a DExit by companies from one of the countries smallest and least populated states has propelled the bill through the state legislature. Several companies, mostly with controlling shareholders, have said they may or will leave Delaware, including Dropbox, Meta Platforms, Tripadvisor, and others. These larger corporations generate about 20% of the state’s total revenue, and lawmakers are conceding any points that will incentivize businesses to remain in state.[2]

SB 21 provides beneficial provisions for companies with a controlling shareholder, like Meta Platforms, which is under the control of Mark Zuckerberg. The bill provides steps that allow for a company and its shareholder to arrange deals, such as selling corporate assets to the controller, that cannot be challenged in court by other investors. The bill makes it hard for investors to sue over certain transactions involving controlling shareholders, such as buying a controlling shareholder's business, if the deal follows certain steps.[3] It also applies to deals with board members and executives, but will not impact existing rules for a takeover of the company by the controlling shareholder. 

Under the proposed bill, if a deal is approved by a board committee that has a majority of independent directors or by a vote by public shareholders, investors cannot challenge it in court. Currently, litigation can only be avoided if both steps are used and the committee must be entirely made up of independent directors. The bill also makes it harder to challenge whether a director is independent. It defines the term "controlling shareholder" and limits records available to shareholders who want to investigate a deal for conflicts.[4]

Opposition to the bill is from other shareholders of larger corporations and corporate academics. Attorneys testified on their behalf, calling the bill radical, rushed, and corrupt. Many believe that the proposed threat of mass exodus from major corporations is an empty promise being used to permit payouts to the largest voices within these companies. Changes to the current corporate code would significantly inhibit the ability of Delaware's Chancery Court to police deals involving conflicts of interest. As a result, influential business leaders would have greater leverage to cut themselves a hefty check at the expense of pensioners, retirees, and ordinary investors.

Joel Fleming, a lawyer who represents shareholders, told lawmakers the bill was a result of lobbying by Meta Platforms and would protect its CEO and controlling shareholder from potential liability that shareholders are currently investigating. The billionaires’ bill has the opportunity to overshadow smaller investors, making their positions within a company obsolete compared to larger or more important investors. CNBC published documents on Wednesday which it obtained from an open records request showing that Meyer, a Democrat, met with Meta officials in the weeks leading up to proposal of the bill. Meyer's spokesperson, Mila Myles said the governor met with Meta representatives to discuss corporate law but noted that the company did not lobby for the bill. She said the governor has been "meeting with everyone" to ensure the state remains a global leader.[5] Meta has not commented on the bill or its repercussions for the company. 

The fear of companies fleeing Delaware is not new and was perpetuated by Elon Musk last year. Corporations like Tesla have expressed concern over recent state court rulings that reinterpreted the role of states in big business. Musk reincorporated his companies to Texas and Nevada after a Delaware judge rescinded his $56 billion pay package as CEO of the electric car maker.[6]

Given Delaware’s history as a blue state, with both legislative chambers dominated by the Democratic Party, it is interesting to witness how fast a piece of pro-business legislation was introduced, voted on, and passed into law. The bill was first introduced in the Senate and assigned to the Judiciary Committee on February 17th, 2025. On March 13, the bill was passed in the Senate with a 20-0 vote. SB 21 faced more difficulty in the House where it was defeated five times before passing on the sixth vote with a 32-7 outcome.[7] Legislators have defended the bill and claim that it reinforces a pattern of protecting business interests and the overall state economy. They say the changes are a necessary course correction that will give corporations' most powerful managers more predictability and consistency as they consider business transactions. The bill was signed by Governor Meyer on March 25th, making it the official state law. 

More than 60% of Fortune 500 companies are incorporated in Delaware.[8] With provisions like SB 21, it is likely that the cluster of companies will remain in the state and even continue to push state legislators to advance their agendas. Smaller shareholders will push back and challenge the corrupt nature of the law, but may be silenced by controlling members’ interests. This sets a concerning precedent that businesses can dictate legislative outcomes by leveraging the threat of relocation. As Delaware remains the corporate stronghold for major companies, lawmakers may feel increasing pressure to prioritize corporate interests over shareholder rights and broader public concerns. This dynamic could lead to a cycle where policymakers become more responsive to business demands, further entrenching corporate influence in state governance. Ultimately, this raises questions about the balance of power between corporations and democratic accountability in legislative decision-making.

Sources:

1. Delaware Corporate Law Overhaul Heads to Final Vote Amid Criticism it Favors Billionaires, Reuters (March 20, 2025), https://www.reuters.com/world/us/delaware-lawmakers-vote-corporate-law-overhaul-face-criticism-2025-03-20/ 
2. Id.
3. Id. 
4. Delaware Lawmakers Approve Corporate Bill That Critics Call Giveaway to Billionaires, Reuters (March 25, 2025), https://www.reuters.com/world/us/delaware-lawmakers-vote-corporate-bill-critics-call-giveaway-billionaires-2025-03-25/ 
5. Id. 
6. Musk’s War on Delaware Spurs Law Pushed by Private Equity, Yahoo Finance (March 26, 2025), https://finance.yahoo.com/news/private-equity-joins-fight-overhaul-152623241.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAANQXrW-STtthLwL_MhoZhTShtdVTGYJYL3PNbRxvJRPqRJBs05FK8f8SY-4p4WNKs-dQHPedrKmviKRd3XxxqJWwEGiDmD848QBkFgRzVO_Ba_6qYbAI0KMdGjSc4UfrEAUnzTmNHT1gMj2_ZRosxugAt6_l8Xs3hmF2Mok2-x-0 
7. S.B. 21, 153rd Gen. Assemb. (Del. 2025).
8. Id.