This article originally appeared as a Gavel to Gavel guest column in the Journal Record on April 17, 2025.
Camryn A. Conroy
The Delaware General Corporation Law (DGCL) is widely recognized for shaping corporate governance across the United States. In fact, Oklahoma, like many states, modeled its Oklahoma General Corporation Act after the DGCL. In March 2025, Delaware enacted significant amendments to the DGCL to enhance corporate practices, reduce litigation risk, and clarify legal standards. The following is an overview of the most impactful changes:
- Strengthened Protections for Interested Transactions
The DGCL’s Section 144(a-c) now offers enhanced safe harbor provisions for conflict-of-interest transactions involving a company’s directors, officers, or controlling stockholders. To qualify for these protections, the transaction must be approved by:
– A properly formed board committee with at least two disinterested directors; and/or
– A majority of votes from informed, disinterested, and uncoerced stockholders.
This change aims to provide greater certainty and reduce potential legal challenges in transactions where conflicts of interest might exist.
- Clarified Standards for “Controlling Stockholder” and “Disinterested Director”
The amendments provide clearer definitions of key governance terms:
– “Controlling Stockholder” and “Control Group” are now explicitly defined in Sections 144(e)(1)-(2). Generally, individuals or groups controlling less than one-third of a corporation’s voting power will not be deemed controllers—adding a bright-line rule that limits who can be held to higher legal scrutiny in insider transactions.
– “Disinterested Director” is now defined in Sections 144(d)(2), (e)(4), and (e)(7)-(8). Directors deemed by the board to be independent under national exchange rules, are presumed to be disinterested unless this presumption is rebutted with strong, specific evidence. Also, simply, being nominated by a stockholder does not make a director automatically “interested” in that stockholder’s transactions.
- Exculpation for Controlling Stockholders
Historically, Delaware law allowed corporations to limit directors’ and certain officers’ liability for breaches of the duty of care via provisions in the corporation’s charter. Revised Section 144(d)(5) extends this protection to controlling stockholders and control groups as well, without requiring a charter amendment. This shift reduces personal risk for large stockholders involved in governance decisions.
- Preservation of Common Law Alternatives
While the updated safe harbors provide much need clarification, they are not exclusive. Amended Section 144 makes clear that Delaware’s longstanding common law, including the “MFW doctrine” and the “entire fairness” standard, remains intact. Courts may still uphold insider transactions if proven fair to the corporation and its stockholders under these standards.
- Refined Stockholder Inspection Rights
Amendments to Section 220 clarify what corporate records stockholders can access. The definition of “books and records” subject to stockholder inspection under Section 220 now includes:
– Formal documents such as board minutes, resolutions, and financial statements.
– Stockholder communications from the past three years.
Informal communications – emails, texts, drafts – are excluded unless the stockholder shows a compelling need. These changes also reinforce confidentiality safeguards, such as redactions or confidentiality agreements.
Summary
The 2025 DGCL amendments provide clearer definitions, new protections, and streamlined processes for evaluating insider transactions and stockholder rights. Together, these changes help corporations operate more confidently and efficiently while maintaining strong legal safeguards in today’s corporate environment.
About the author:
Camryn A. Conroy is a transactional attorney representing clients in various commercial and business matters.
CONTACT: caconroy@phillipsmurrah.com | 405.606.4735
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