DOVER, DE- The Delaware Senate unanimously passed Senate Bill 21 on Thursday, a controversial measure that has sparked heated discussions inside Legislative Hall.
Senate Bill 21 seeks to change how business deals between company leaders and major shareholders are handled in the state.
State Senator Brian Pettyjohn, a Republican from District 19, explained the bill’s purpose, noting it aims to address concerns about the balance of power in corporate governance.
"Senate Bill 21 is introduced really as a result of the perception that Delaware corporate law has become unbalanced, more in favor of shareholder groups versus the board of directors that govern the company."
Delaware, known as the corporate capital of the U.S., is home to over 2 million entities, with many of them choosing to incorporate in the state due to its favorable laws.
Pettyjohn argues that maintaining this business-friendly environment is critical for the state's economy.
"Losing the corporate franchise dollar would be devastating to our state’s economy. It could lead to things we don’t want, like a sales tax or statewide property taxes."
While the bill has garnered support, it has also faced opposition. Critics argue that it grants too much power to corporate boards over shareholders.
However, supporters, including Senator Trey Paradee, a Democrat from District 17, contend that the bill simply codifies a longstanding practice in Delaware.
"I think the bill really just codifies a practice that Delaware has always maintained, honestly. And it’s really about striking a balance between corporations and shareholders."
Pettyjohn emphasized that these changes will bring stability to the state's business climate, helping ensure companies continue to operate in Delaware.
"Corporations love stability. They love predictability. And as long as they know that we’re stabilizing the waters here in Delaware, we’re calming the rough seas, they will be more inclined to stay here in Delaware versus looking for other states."
Senate Bill 21 now moves from the Senate to the House for further discussion and a vote.