As readers of this blog well know, a recent debate has been brewing over whether Delaware corporations should de-camp and reincorporate in another state, with Nevada and Texas often the preferred candidates. This debate gained momentum when Elon Musk called for states to redomesticate outside Delaware after the state’s courts struck down his ginormous Tesla pay package. As discussed here, in response to the DExit debate, Delaware legislators have now proposed a massive revision to Delaware’s corporate laws, among other things as a way to try to stop the perceived retreat of companies from Delaware. It now appears that opponents of the legislation are mounting an organized campaign to oppose the proposed revisions. It looks like the game is on for the proposed changes, as the bill sponsors prepare to try to move the legislation forward.

Much of the current Delaware redomestication debate derives from Delaware court decisions involving transactions at controlled company’s (that is, corporations, like, for example. Tesla, where there is a controlling shareholder). As detailed in a comprehensive February 19, 2025, post by Cydney Posner on the Cooley law firm’s PubCo blog (here), introduces a number of measures, including most prominently the creation of “safe harbor” protections for directors and officers, controlling shareholders, or control groups, providing liability protection if they have interests that make them “not independent” with respect to transactions or actions. The proposed legislation also amends stockholder inspection rights for corporate records.

The proposed new legislation (known as Senate Bill 21, or SB 21) provoked an immediate reaction, some of it distinctly unfavorable. For example, Tulane Law Professor Ann Lipton, in a February 17, 2025 post on the Business Law Prof Blog entitled “Delaware Decides Delaware Law Has No Value” (here) said, among other things, that “undo certainly the last 10 years of Delaware jurisprudence, if not the last 50, in favor of a model of corporate self-policing,” adding that “the changes, if adopted, mean it will be laughably easy, with a few incantations of magic words, to create the appearance of procedural regularity, while shareholder plaintiffs will be denied access to the information necessary to establish any procedural irregularity.”

A February 24, 2025, Law360 article (here) reports that there is now a “public opposition campaign” against the legislation, complete with a website and billboards. The website – www.stopsb21.com – states that the opposition is the work of a “coalition of advocates and experts dedicated to safeguarding the future of Delaware’s corporate governance system.” According to the website, the coalition opposing the bill consists of consists of “consumer rights organizations, legal scholars, corporate governance specialists, and public interest advocates committed to defending the interests of everyday Americans—not billionaires.” The website features an image on its home page of Elon Musk wielding a chainsaw, with the caption “Protect Delaware from Elon Musk. Save Your Pension.” The site also contains a statement that “Elon Musk’s lawyers are pushing Delaware Senate Bill 21 – the Billionaires’ Bill—a dangerous proposal that would strip away critical protections for pension funds and everyday investors.”

In addition to the website, others are gearing up for a significant public campaign to criticize the bill. Among other things, leading plaintiffs’ lawyers are taking to social media to criticize the bill. For example, Bernstein Litowitz attorney Jeroen van Kwawegen, in a recent LinkedIn post (here), called the proposed legislation “a license to steal from institutional investors and pension funds, including pensions of teachers, police officers, and firefighters who’ve worked for the common good every single day. The corporate defense bar knows it and is rushing it through outside the normal process while threatening the new Governor. It’s the most egregious corporate thuggish behavior I’ve seen since Musk.”

In other words, it certainly looks like there could be quite a bit of fireworks as the proposed legislation makes its way forward. Apparently, we will not have too wait long. According to the Law360 article I quoted above, SB 21 is up for a first hearing in a Senate committee on March 12.

Somehow lost in the fireworks are a couple of really basic questions. The first is whether this legislation is even necessary. As UCLA Law Professor Stephen Bainbridge has documented in his ProfessorBainbridge.com website (here), the flow of corporate departures is far from a flood; it is, Bainbridge says, merely a trickle. Which raises the question whether the defense bar is overreacting to a crisis that has been ginned up by Elon Musk in a fit of pique.

There is another question, which is whether, even if SB 21 passes, is it going to affect most companies’ decisions about whether or not to reincorporate outside Delaware. Most of the recent Delaware case law at the center of the current debate involved controlled companies. The proposed legislation mostly deals with issues surrounding controlled companies and controller transactions. However, most Delaware corporations are not controlled companies. They are going to make their decision whether to stay or leave without respect to the law pertaining to controlled companies.

There is one final consideration that should not be overlooked here. That is that even if questions have been raised about certain decisions of Delaware’s courts, the state’s overall and historical reputation is likely to ensure that most companies will remain there, in preference to other jurisdictions where the historical record is still being established. As Professor Bainbridge observed in an earlier post about these Delaware reincorporation issues, “Delaware’s competitors face their own hurdles, and the state’s advantages – efficiency, legal expertise, and a comprehensive statutory framework – remain unmatched. As long as Delaware can maintain its reputation as marginally better than its alternatives, it will likely retain its position at the top.”