Delaware Should Reject Proposal to Strengthen Corporate Insiders, Shrink Transparency
WASHINGTON, D.C. — Delaware General Assembly leaders today introduced legislation that would significantly alter Delaware corporate law to expand rights for controlling shareholders and restrict investor rights to make “books and records” requests about the companies they own.
In response, Public Citizen Co-President Lisa Gilbert said,
“It’s nothing new for whiny billionaires to complain and threaten when they don’t get their way. Delaware should not sacrifice investor protections — which strengthen corporate governance and overall corporate performance — in an effort to appease complaints and demands from the likes of Elon Musk and Bill Ackman.
“Senate Bill 21 would make it easier for corporate insiders to maneuver to increase their power and wealth at the expense of other shareholders, and in many instances block shareholders from challenging conflicted transactions. It would also shrink corporate transparency, diminishing the ability of shareholders to make “books and records” requests of the corporations they own.
“These changes should sound alarm bells. They aren’t changes to maintain or restore balance, they are sweeping moves that would let CEOs and dominant insiders manipulate governance to enrich themselves still further.
“The books and records proposal is glaring in its pullback from transparency. The bill would remove the right for shareholders to obtain records for “a purpose reasonably related to such persons interest as a stockholder” — a feature that has been a signal feature of Delaware corporate law and that strengthens not just corporate accountability to shareholders but overall corporate performance.
“Of course corporate insiders who view themselves as entitled to the rights of monarchs would demand such concessions. But Delaware’s commitment to investor rights, fair dealing and corporate transparency should counsel the General Assembly to reject SB 21.”