Written by Mario Polito and Crystel Saraie.

The 2025 amendments to the Delaware General Corporation Law (DGCL) mark a significant shift in corporate governance, introducing structural reforms to conflicted transaction approvals and stockholder inspection rights. Enacted through Senate Bill 21 in March 2025, these changes aim to streamline corporate decision-making, reduce litigation risks, and reinforce Delaware’s position as a business-friendly jurisdiction.

Key Changes to Section 144: Safe Harbors for Conflicted Transactions
Amendments to Section 144 create statutory safe harbors for conflicted transactions involving directors, officers, and controlling stockholders. [2] These transactions are protected from equitable relief or damages if approved by either (1) a majority of disinterested directors acting in good faith and without gross negligence, or (2) an informed, uncoerced vote of disinterested stockholders. Controller-led going-private deals, however, require both approvals. The amendments also extend exculpation from monetary liability for duty-of-care breaches to controlling stockholders (≥33% voting power), aligning their protections with those of directors and officers and removing the need for specific charter provisions. Additionally, public company directors deemed independent under exchange rules are now presumed independent under Delaware law, reducing litigation risk.

Overhaul of Section 220: Narrowing Stockholder Inspection Rights
Section 220 now limits stockholder access to corporate records, restricting demands to core documents like charters, bylaws, board/committee minutes, director materials, annual financials, and certain stockholder agreements. [2] Informal communications (e.g., emails, texts) are excluded unless functionally equivalent to official records. Procedural standards are tighter: requests must be in good faith, clearly state a proper purpose, and specify documents directly tied to that purpose. Corporations can redact unrelated content and require stockholders to incorporate produced materials into any related litigation.

Implications for Businesses and Stockholders
The amendments respond to concerns about Delaware’s litigation-heavy environment and competition from states like Nevada. By balancing director protections with stockholder rights, Delaware aims to retain its status as the preferred incorporation destination.

For corporations and directors, the clarified legal framework brings several advantages. First, reduced litigation exposure is a key benefit, as safe harbors under Section 144 provide clearer pathways to dismiss lawsuits over conflicted transactions, thereby lowering legal costs. Additionally, corporate boards now enjoy greater flexibility in approving transactions through either director or stockholder cleansing mechanisms, with the exception of controller buyouts. Furthermore, the more precise definitions under Section 220 enhance predictability in recordkeeping, helping corporations better anticipate and manage demands for internal document inspections.

For stockholders, however, the changes present notable challenges. Activist investors may encounter greater obstacles in obtaining internal documents, which could hinder their ability to investigate possible mismanagement. Moreover, the extension of exculpation provisions to controlling stockholders may diminish their accountability for duty-of-care violations, potentially shifting the associated risks onto minority shareholders.

Conclusion
The 2025 DGCL amendments reflect Delaware’s ongoing effort to adapt its corporate governance framework to modern challenges. While they provide clarity and reduce procedural uncertainties for corporations, critics argue the changes prioritize managerial flexibility over stockholder oversight. Businesses incorporated in Delaware should review their governance structures to leverage new safe harbors, while investors may need to recalibrate strategies for engaging with boards in a more restricted informational landscape.

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[1] Practical Law Corporate & Securities. (2025, May 1). March 2025 amendments to the DGCL. Reuters Practical Law The Journal. https://www.reuters.com/practical-law-the-journal/transactional/march-2025-amendments-dgcl-2025-05-01/

[2] Stigi, J., & Choi, E. (2025, April 1). Delaware enacts sweeping changes to the Delaware General Corporation Law. Corporate & Securities Law Blog. https://www.corporatesecuritieslawblog.com/2025/04/delaware-enacts-sweeping-changes-to-the-delaware-general-corporation-law/