TheCorporateCounsel.net

Yesterday, on DealLawyers.com, I blogged about Senate Bill 21, which was introduced in the Delaware Senate Judiciary Committee on Monday. The bill proposes sweeping changes to the DGCL that — like last year’s amendments — would override certain existing case law. This CLS Blue Sky blog by law professors Eric Talley (Columbia), Sarath Sanga (Yale) and Gabriel V. Rauterberg (University of Michigan) says, “if adopted, these measures would mark the most significant single-year revision of Delaware’s corporate code since at least 1967” and notes that the proposed changes cut “across foundational doctrines—controller conflicts of interest, derivative litigation, access to corporate records.” Plus, a concurrent Senate Resolution requested that the Council of the Corporation Law Section recommend legislative action on attorney’s fee awards.

As I noted on DealLawyers.com, the bill is notable in both substance and process. The blog says, “most striking of all is the speed with which this is happening—circumventing the usual measured processes of the Delaware Bar’s Corporation Law Council and the typical stakeholder buy-in.” There’s also speculation on LinkedIn that the proposed changes might be approved as soon as this spring — not in the usual August timeframe.

In the following two blogs, I’ll share a summary of key changes to DGCL Sections 144 and 220. Memos already started rolling in yesterday, and we’re posting them in our “Delaware Law” Practice Area. Check that out for more info!

As you’ll see in the subsequent blogs, the bill would make massive changes to Delaware’s approach to reviewing controlling stockholder transactions and attempts to narrow and define some related concepts involved in reviewing the fairness of transactions with a controlling stockholder — including what constitutes “independence” for the directors that approved or recommended the transaction. Even before this bill, director independence was already getting a lot of attention — after the SEC’s settlement with a public company director due to his failure to disclose his close personal friendship with an executive officer and the Delaware Chancery Court’s Tornetta decision.

This will be one of many topics addressed in our upcoming webcast “Director Independence: Recurring Issues and Recent Developments.” Join us on Wednesday, March 5, at 2 pm ET to hear Skadden’s Caroline Kim, Gunster’s Bob Lamm, Davis Polk’s Kyoko Takahashi Lin and Morris Nichols’s Kyle Pinder discuss recurring issues, recent developments and some common scenarios. Members of this site are able to attend this critical webcast at no charge. If you’re not yet a member, try a no-risk trial now. Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund.

– Meredith Ervine