What’s New in Delaware? Key Corporate & LLC Changes Every Business Should Know in 2025
July 10, 2025 | By Candace Groth
If you’ve ever formed a company—or even thought about it—you’ve likely thought of Delaware as the state for incorporation. It is home to over 1.8 million business entities, including over two-thirds of Fortune 500 companies.
In March 2025, the Delaware government enacted significant modifications to the Delaware General Corporation Law (“DGLC”). These changes are more than legal technicalities; they reflect a growing effort to stay competitive and address the evolving needs of both business leaders and investors.
This blog provides a brief overview of the changes and how they impact Delaware companies.
New Statutory Safe Harbors for Conflicted Transactions (§144(a)-(c))
What Changed?
Delaware has created new statutory safe harbors for transactions involving fiduciaries—including directors, officers, controlling stockholders, and control groups—where conflicts of interest are present. There is now a streamlined standard for cleansing conflicted transactions, offering significant protection from equitable remedies and monetary damages. There are now two distinct frameworks based on the type of transaction:
1. General Conflict Transactions: To qualify for the safe harbor, a company must now deploy just one of the following cleansing mechanisms:
- Approval by a properly informed and functioning special committee of at least two disinterested directors; or
- An informed, uncoerced vote of disinterested stockholders.
Why it matters: This marks a departure from Delaware’s evolving and sometimes unpredictable common law standards. For example, in Tesla Motors, Inc. Stockholder Litigation, the Delaware Court of Chancery reviewed Elon Musk’s conflicted role in Tesla’s $2.6 billion acquisition of SolarCity under the entire fairness standard, despite the existence of some procedural safeguards. The court ultimately upheld the deal in 2022, but the case illustrated the cost and uncertainty of litigation around conflicted controller transactions—even when a single cleansing mechanism is used.
These 2025 statutory amendments aim to provide greater clarity and transactional certainty by specifying when and how safe harbor protection applies. For controller-led go-private deals, however, both cleansing mechanisms must still be used to invoke the full protection.
2. Controller “Go-Private” Transactions: In transactions where a controlling stockholder seeks to take the company private, both of the cleansing mechanisms must still be used:
- A disinterested special committee; and
- A disinterested stockholder vote.
Why it matters: These changes provide streamlined guidance for handling most conflicted transactions, reducing uncertainty and litigation risk. At the same time, they preserve stronger procedural safeguards in controller-led go-private deals—where the potential for coercion or self-dealing is highest. Importantly, fiduciaries who do not use a cleansing mechanism may still defend the transaction by proving it was entirely fair, as Delaware law has long allowed. However, the new statutory safe harbors offer clearer rules and added protection when properly followed.
Defined Terms: Clarity on Who’s a “Controlling Stockholder” and “Control Group” (§144(e)(1)-(2))
What Changed?
The amendments now define “controlling stockholder” and “control group” for the first time under the DGCL. Specifically, a controlling stockholder or control group generally must have:
- A one-third voting power floor is generally required to qualify as a controlling stockholder or group.
Why it matters: By setting a clear one-third voting power floor to qualify as a controlling stockholder or control group, the amendments eliminate much of the uncertainty and litigation risk that previously surrounded “de facto” control claims. Under prior law, plaintiffs could argue that a stockholder with significantly less than majority voting power still exercised effective control – based on influence, board presence, or historical involvement – leading to expensive and unpredictable litigation. Now, companies, directors, and investors have a bright-line rule: unless someone holds at least one-third of the voting power AND can meaningfully influence management, they’re not presumed to be a controller.
Who Counts as a “Disinterested Director”? (§144(d)(2), (e)(4), (7)-(8))
What Changed?
A clearer definition of “disinterested director” has also been added by the amendments as follows:
- If a board determines that a director of a public company is independent under the applicable national exchange rules, that triggers a presumption of disinterestedness.
- This presumption may only be rebutted with substantial and particularized evidence.
- A director’s nomination by a stockholder does not, by itself, make that director “interested” in matters involving the nominating party.
Why it matters: This change brings much-needed clarity to a key question in corporate governance: who counts as a truly “disinterested” director? By aligning the definition with familiar NYSE and NASDAQ independence standards, the law gives boards a reliable framework for evaluating director independence. Once a board makes that determination, it carries a strong legal presumption – meaning plaintiffs must come forward with specific and compelling evidence to challenge it, rather than relying on vague claims of influence or affiliation.
A more precise definition of “disinterested director” is especially important in conflicted transactions, where decisions by disinterested directors can trigger legal safe harbors and protect the deal under the business judgment rule. The clarification also protects directors from being deemed conflicted simply because a stockholder nominated them. Ultimately, the update gives boards greater confidence in forming committees and making decisions, while discouraging meritless litigation that often targets director independence without a factual basis.
Controller Exculpation for Duty of Care Claims (§144(d)(5))
What Changed?
Previously, only directors and officers could be absolved for breaches of the duty of care under a charter provision. The new amendments extend that protection to controlling stockholders and control groups—without needing a charter amendment.
Why it matters: Previously, exculpation provisions applied only to directors and officers (and only if included in the corporate charter). This change extends protection to controllers without requiring any charter amendment, aligning controller protections more closely with those available to board members.
Refined Stockholder Inspection Rights (§220 Amendments)
What Changed?
Section 220 has been overhauled to narrow the scope of records that stockholders can demand:
- “Books and records” are now specifically defined to include formal documents such as board and committee minutes.
- Courts may order production beyond those materials only if the stockholder meets stringent standards, including:
- A compelling need tied to a proper purpose, and
- Clear and convincing evidence that the requested records are necessary and essential
Why it matters: The amendments also introduce express confidentiality safeguards, including redactions and confidentiality agreements, to protect sensitive corporate information during the inspection process. This makes it harder for plaintiffs to fish for evidence through informal discovery, while preserving access to important governance materials when needed.
Effective Date and Scope of Application
These amendments became effective upon the Governor’s signature and apply retroactively to all acts or transactions—whether before, on, or after enactment—except for:
- Any action, proceeding, or Section 220 demand commenced on or before February 17, 2025, the date the amendments were first publicly released.
The 2025 DGCL amendments represent a significant shift in how Delaware companies manage conflicted transactions, board approvals, and document inspections. They codify protections that were previously subject to evolving case law, offering greater clarity and predictability for corporate decision-makers.
Candace would like to thank VW law clerk, Emily Keller, for her help with this blog.
About the Author(s)
Candace Groth
Candace Groth is a senior attorney at Vela Wood. She focuses on mergers & acquisitions and complex LLC matters.
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