“In the wake of certain judicial rulings that surprised many practitioners, voices from various quarters have called into question the wisdom of Delaware incorporation. We do not join them. While there is no one-size-fits-all answer to important business judgments, and every company’s incorporating decision must be made on its individual merits, we believe Delaware incorporation remains a wise choice for most widely-held business organizations. Delaware remains the gold standard for corporate law in the United States and beyond.” Martin Lipton of Wachtell, Lipton, Rosen Katz, commenting on the 2025 Delaware General Corporate Law Amendments (DGCL Amendments) in the Harvard Law School Forum of Corporate Governance.

The “gold standard” has recently been called into question, as some highly publicized companies decided to convert out of the state. This was the impetus for the DGCL Amendments. One of the targeted areas of the DGCL Amendments was control transactions, meaning when a controlling stockholder or group (a “controller”), which otherwise exercises board or managerial control, causes the corporation to engage in transaction to the controller’s benefit. These benefits may include the following:

• Financial Benefit
• Reduction or Elimination of Liability
• Contractual Rights, Special Payouts, Side Deals
• Protection Against Litigation
• Preferential Access or Information
• Special Tax or Liquidity Benefits

In certain circumstances, this may be commercially necessary or strategically prudent such as in the following cases:

• Retention or Incentive Packages
• Corporate Restructurings
• Negotiating Settlements or Resolving Litigation

In the Match Group, Inc. case in 2024, the Delaware Supreme Court held that all transactions where a non-ratable benefit exists, meaning when a controller receives a material, unique benefit not shared with other stockholders, that transaction would be held to an entire fairness standard. While subject to an exclusion with a vote of both a majority of disinterested directors and shareholders, the transaction must be “entirely fair” to the corporation and the stockholders, a standard in practice that is often so demanding and rigorous that the transaction will be effectively dead on arrival. The DGCL Amendments took dead aim at this case. Now, there are two alternative options:

1. The company’s board appoints a committee with two or more disinterested directors that have the authority to approve or disapprove of the transaction, and that committee, after receiving all of the material facts of the transaction, approves it in good faith; or
2. A majority of disinterested stockholders approves the transaction. These stockholders must be informed and uncoerced.

Thus, the DGCL Amendments provide relief and clarity to controllers who are in Delaware or who are seeking transactions where Delaware law controls. Perhaps the standard is still indeed golden.

Jerome Fogel is co-founder of Fogel & Potamianos LLP, a firm recognized by Chambers & Partners’ California Spotlight Guide for excellence in corporate law. A partner in the Corporate Practice Group and Chair of the Sports & Entertainment Group, he is known as an innovator and dealmaker in the legal community. He serves as an offsite general counsel to privately held companies, including representation in mergers and acquisitions and capital markets transactions.

Disclaimer: This content is not a substitute for obtaining legal advice from a qualified attorney for your company and its particular attenuating facts. This content may be considered attorney advertising in some states.