Delaware Improves Clarity on Corporate Interested Party Transactions

On May 25, 2025, the Delaware Governor signed into law amendments to Section 144 of the Delaware General Corporate Law (the “DGCL”) on interested party transactions. The amendments provide to directors, officers and stockholders explicit safe harbors and limitations on liability for certain interested party transactions that were previously “void or voidable.” New safe harbor procedures deal with: (i) under new Section 144(a), transactions between the corporation and an interested director or officer; (ii) under the new Section 144(b), transactions between the corporation and a controlling stockholder, other than “going private” transactions; and (iii) under the new Section 144(c), controlling stockholder transactions that are “going private” transactions. The new procedures apply not only to future transactions, but also past transactions except those subject to litigation or proceedings on or before February 25, 2025. Amendments to Section 220 of the DCGL in the same law narrows a bit information that can be requested by a stockholder, although (i) without affecting discovery in court or (ii) if the stockholder can show a compelling need.