The ‘Billionaire’s Bill’: Delaware set to change corporate law

It was reported in March 2025 that all-encompassing changes were due to be made to Delaware’s governance laws to make the state seem more welcoming for billionaire-led entities such as Tesla and Facebook. These changes were reportedly prompted by concerns that recent rulings had antagonised these entities, and that corporations would move to more relaxed jurisdictions such as Nevada or Texas. This article explores a few of the challenges this will mean for due diligence investigators.

A key decision that had spurred these moves was reportedly the second judgment at the end of 2024 to stop Elon Musk’s record pay package by Tesla. The package of stock options, which was worth $56bn when voided in January 2024, had reached more than $100bn after a 44 percent surge in Tesla’s stock that year. However, as Delaware attempts to stem the tide of these migrations, Tesla and several other companies have already migrated. Meanwhile, Facebook is under scrutiny in Delaware over its board’s oversight of customer data policies and has also said it is considering moving.

The impact of these changes to the corporate law will include:

• Limiting shareholder lawsuits: The new law will restrict lawsuits against founder-led companies.
• Safe Harbours: The law will create safe harbours for transactions, making it easier to defeat conflict of interest claims.
• Relaxes independence: The legislation relaxes the definition of independence when deciding if a board member has a conflict in a disputed transaction.
• Tightens privacy: it also limits the ability of shareholders to access directors’ and officers’ communications.

This legislation has sparked debate among corporate advocacy groups, investors, and legal experts. Critics of the new laws have called the legislation ‘the billionaire’s bill’, saying it would allow powerful CEOs to more easily engage in self-dealing as the possibility of shareholder lawsuits reduces.

Impact on Due Diligence Investigators

The changes to Delaware’s governance laws will have implications for due diligence investigators including:

• Higher scrutiny: With the new limitations on shareholder lawsuits, investigators may need to be more meticulous in their evaluations to ensure that any potential issues are identified and addressed early.
• Shift in focus: Due diligence efforts might need to adapt to focus more on the implications of the new governance structures and how they impact corporate behaviour and decision-making.
• Jurisdictional considerations: As companies consider moving to states with more lenient laws, investigators will need to be aware of the varying legal landscapes and how they affect corporate governance and compliance.

Overall, these changes will require due diligence investigators to adapt their methodologies and remain vigilant in their assessments of corporate governance and potential risks.

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