Corruption – Page 2 – Dael A. Norwood

DGCL Fiasco 2025: Sources

March 2, 2025March 26, 2025 daelnorwood

Or, A Bibliography of News, Opinion, and Sources Relating to the 2025 Attempt to Revise Delaware’s General Corporation Law. Final update: 3/26/25.

A printed image of a long receding hallway in a grecian temple, with timelines and chronologies forming the wall, floors, and ceilings. Emma Willard, “The Temple of Time” (1846), via Cartography Associates (CC BY-NC-SA 3.0) https://www.davidrumsey.com/luna/servlet/detail/RUMSEY~8~1~315043~90083688:The-Temple-of-Time# — Emma Willard, “The Temple of Time” (1846), via Cartography Associates (CC BY-NC-SA 3.0)

Note: SB 21 (repackaged as SS 1 for SB 21) passed the Delaware House late on Tuesday, March 25, 2025 and was signed into law the same night by Governor Meyer. The bibliography below is updated to include reports through the following day – March 26, 2025 – but nothing beyond that point.

Since it was dropped on an unsuspecting public two weeks ago, Senate Bill 21 has occasioned a great deal of both propaganda and conversation – and even some reporting and evidence-based analysis. This short bibliography (or, less pretentiously, link-roundup) is intended to help Delawareans and other folks get up to speed on the issue, understand the forces in play, and get a sense of the stakes.

I will update it, as my time allows, and events merit. I have tried to (mostly) link publicly accessible sources, but there may be some paywalled exceptions.

Some caveats: the bibliography below is not comprehensive, nor is it intended to be. It’s what, in my judgment, is the most useful for understanding what the hell is going on.

Also! It is not a guide to the bloggy conversations among corporate law specialists, a play-by-play for Dover courtiers’ inside baseball, or the group chat among oligarchics’ agents – though it intersects with all of those discourses. (Go to LinkedIn, Facebook, and Signal, respectively, if you want those.)

Get Up To Speed

Xerxes Wilson, “Controversial Corporate Law Changes Passed by House, Signed by Delaware Governor,” The News Journal, March 26, 2025, https://www.delawareonline.com/story/news/2025/03/25/delaware-corporate-law-changes-chancery-court-signed-into-law-by-governor-matt-meyer/82655315007/;

Karl Baker and Jacob Owens, “Meyer Signs Controversial Senate Bill 21 into Law after Bitter House Debate,” Spotlight Delaware, March 26, 2025, http://spotlightdelaware.org/2025/03/26/meyer-signs-senate-bill-21/.

Lora Kolodny, “Meta’s Potential Exit from Delaware Had Governor Worried Enough to Call Special Weekend Meetings,” CNBC, March 19, 2025, https://www.cnbc.com/2025/03/19/meta-billions-of-dollars-at-stake-in-overhaul-delaware-corporate-law.html.

Lora Kolodny, “Tesla’s Law Firm Drafts Delaware Bill That Could Salvage Musk Pay Package,” CNBC, February 18, 2025, https://www.cnbc.com/2025/02/18/firm-representing-musk-tesla-drafts-bill-for-delaware-corporate-law.html.

Jordan Howell, “DelDems Roll over for Musk,” Delaware Call, February 17, 2025, https://delawarecall.com/2025/02/17/deldems-roll-over-for-musk/.

Primary Source(s)

Senate Substitute 1 for Senate Bill 21: “AN ACT TO AMEND TITLE 8 OF THE DELAWARE CODE RELATING TO THE GENERAL CORPORATION LAW,” filed March 12, 2025, passed March 25, 2025, https://legis.delaware.gov/BillDetail/141930

Primary sponsor: Sen. Townsend
Cosponsors: Sen. Sokola, Lockman, Hocker, Pettyjohn; Reps. Griffith, Minor-Brown, Harris, Osienski, Dukes, Spiegelman

House Amendment 1 to Senate Substitute 1 for Senate Bill 21, filed March 18, 2025, [proposed amendment, not picked up] https://legis.delaware.gov/BillDetail?LegislationId=141964

Sponsor: Rep. S. Phillips
Summary: “This Amendment mirrors the proposed changes in SS 1 for Senate Bill 21, but provides that the corporation must “opt-in” to adopt them. It adds a new section one, which describes the method by which the corporation may opt in to the changes from the default, existing law.”

Senate Bill 21: “AN ACT TO AMEND TITLE 8 OF THE DELAWARE CODE RELATING TO THE GENERAL CORPORATION LAW,” filed February 17, 2025, https://legis.delaware.gov/BillDetail/141857 [original bill]

Primary sponsor: Sen. Townsend
Cosponsors: Sen. Sokola, Lockman, Hocker, Pettyjohn; Reps. Griffith, Minor-Brown, Harris, Osienski, Dukes, Spiegelman

Senate Concurrent Resolution 17, https://legis.delaware.gov/BillDetail/141858

Primary sponsor: Sen. Townsend
Cosponsors: Sen. Sokola, Lockman, Hocker, Pettyjohn; Reps. Griffith, Minor-Brown, Harris, Osienski, Dukes, Spiegelman

Delaware General Corporation Law, Delaware Code, Title 8, https://delcode.delaware.gov/title8/c001/

Office of the Governor, “Discussion Re: Corporate Franchise,” February 2025, https://www.scribd.com/document/840790103/CNBC-copy-2025-03-12-de-Governor-FOIA-Response-38#download&from_embed.

Internal emails between personnel in Gov. Matt Meyer’s office and various Musk & Zuckerberg associated lawyers, coordinating drafts, details, & messaging around the push for SB 21;

provided by Lora Kolodny, “Meta’s Potential Exit from Delaware Had Governor Worried Enough to Call Special Weekend Meetings,” CNBC, March 19, 2025

Dig Deeper

The items below represent a wide spectrum of debate on SB21 and the political economy of Delaware’s corporate law; inclusion is not an endorsement that a given piece is reliable, truthful, or accurate – simply influential. This list is organized chronologically, working backwards from most recent.

Karl Baker, “Lobbying on Corporate Law Change SB21 Enters Final Stretch,” Spotlight Delaware, March 21, 2025, http://spotlightdelaware.org/2025/03/21/sb21-final-stretch/.

Katie Tabeling, “Top Delaware Firm Takes Quiet Role in Corporate Amendment Debate,” Delaware Business Times, March 20, 2025, https://delawarebusinesstimes.com/news/firm-quiet-role-in-corporate-amendment/.

Yvonne Deadwyler, “Preserving the Corporate Franchise Is in the Interest of All,” Delaware Business Times, March 18, 2025, https://delawarebusinesstimes.com/news/viewpoint-sb-21-deadwyler/

Katie Tabeling, “Meet the Business Organizations Endorsing SB 21,” Delaware Business Times, March 17, 2025, https://delawarebusinesstimes.com/news/business-endorsing-sb-21/

Joel Friedlander, “Are Hamermesh, Chandler and Strine Making Delaware Corporate Law Great Again?,” The News Journal, March 17, 2025, https://www.delawareonline.com/story/opinion/2025/03/17/are-hamermesh-chandler-and-strine-making-delaware-corporate-law-great-again-opinion/82490918007/.

Joseph R. Mason, “SB 21 Could Cost Delaware Millions,” Delaware Business Times, March 17, 2025, https://delawarebusinesstimes.com/news/viewpoint-sb21-could-cost-millions/

Matthew G. Jacobs, General Counsel, CalPERS to Senator Bryan Townsend, et al, Re: “Delaware Senate Bill No. 21,” March 14, 2025, https://s3.documentcloud.org/documents/25590146/letter-from-calpers-to-delaware-leadership.pdf.

Katie Tabeling, “How a New Bill Raises Uncertainty in Wilmington’s Legal Economy,” Delaware Business Times, March 14, 2025, https://delawarebusinesstimes.com/news/sb-21-legal-economy/.

Karl Stomberg, “Capital Fight or Flight: Delaware’s History of Gangster Capitalism and the Need for a Democratic Economy,” Delaware Call, March 13, 2025, https://delawarecall.com/2025/03/13/capital-fight-or-flight/.

Greg Vallaro, “Delaware Senate Bill 21 Is a Disaster. It’s Time to Call Strike Three,” News Journal, March 12, 2025, https://www.delawareonline.com/story/opinion/2025/03/12/delaware-senate-bill-21-is-a-disaster-opinion/82277898007/.

Jeffrey P. Mahoney, “SB 21 Threatens Long-Term Shareholder Rights,” Delaware Business Times, March 10, 2025, https://delawarebusinesstimes.com/news/viewpoint-sb-21-shareholder-rights/.

Alan Jagolinzer et al., “The False Crisis Pushing Delaware to Surrender Shareholder Rights,” ProMarket, March 7, 2025, https://www.promarket.org/2025/03/07/the-false-crisis-pushing-delaware-to-surrender-shareholder-rights/.

William Chandler and Lawrence Hamermesh, “Delaware’s Corporate Law, Proposed Amendments Play Fair,” Delaware Business Times, March 6, 2025, https://delawarebusinesstimes.com/news/viewpoint-sb21-chandler-hamermesh/.

June Carbone, Nancy Levit, and Naomi Cahn, “Elon Musk and the Rise of the Dictator CEO,” Washington Monthly, March 6, 2025, http://washingtonmonthly.com/2025/03/06/elon-musk-and-the-rise-of-the-dictator-ceo/.

Cris Barrish, “Is ‘DExit’ a Real Threat to Delaware’s $2B-a-Year Incorporation Kingdom, and Will the Proposal Protect or Destroy ‘the Franchise’?,” WHYY, March 5, 2025, https://whyy.org/articles/dexit-delaware-franchise-incorporation-industry-billionaires-bill/

“Legal Experts Weigh in on Townsend’s Remarks in Delaware Call Interview,” Delaware Call, March 4, 2025, https://delawarecall.com/2025/03/04/legal-experts-weigh-in-on-townsends-remarks-in-delaware-call-interview/

Daniel Taylor, “Delaware’s Manufactured Corporate Crisis,” Delaware Business Times (blog), March 4, 2025, https://delawarebusinesstimes.com/news/viewpoint-taylor-sb-21/.

Chris Foulds, “Billionaire Corporate Law Smash-and-Grab Could Destroy Delaware’s Economy,” News Journal, March 3, 2025, https://www.delawareonline.com/story/opinion/2025/03/03/billionaire-corporate-law-smash-and-grab-could-destroy-delawares-economy-opinion/80549853007/.

Andrew Verstein, “The Corporate Census,” SSRN Scholarly Paper (Rochester, NY: Social Science Research Network, February 25, 2025), https://papers.ssrn.com/abstract=5154952.

NB this item is a working paper – meaning, it is an unpublished draft, that has not undergone peer review. All arguments should be understood as preliminary, and incomplete.

Ann Lipton, “Rip American Shareholder Capitalism,” Financial Times, February 24, 2025, sec. FT Alphaville, https://www.ft.com/content/85eccee4-3890-4c25-bd89-eb522b95efb9;

Lawrence Cunningham, “Delaware Aptly Balances Certainty and Scrutiny in Corporate Law,” Bloomberg Law, February 24, 2025, https://news.bloomberglaw.com/us-law-week/delaware-aptly-balances-certainty-and-scrutiny-in-corporate-law.

Dael Norwood, “The Data Does Not Support the Narrative,” Goose Commerce (blog), February 23, 2025, https://daelnorwood.com/2025/02/23/the-data-does-not-support-the-narrative/.

Jordan Howell, “Delaware Call Interviews Sen. Bryan Townsend About SB21,” Delaware Call, February 21, 2025, https://delawarecall.com/2025/02/21/delaware-call-interviews-sen-bryan-townsend-about-sb21/.

Ryan Cooper, “Why Are Delaware Democrats Trying to Give Elon Musk $55 Billion?,” The American Prospect, February 21, 2025, https://prospect.org/api/content/63bddae0-efd3-11ef-9411-12163087a831/.

Jacob Owens, “Chief Justice Seitz Warns Lawmakers against Reducing Courts’ Independence – Spotlight Delaware,” Spotlight Delaware, February 21, 2025, https://spotlightdelaware.org/2025/02/21/chief-justice-warns-lawmakers-against-reducing-courts-independence;

Peter Walker, “Is Delaware Losing Startup Incorporations to Other States? … (No),” LinkedIn (blog), February 21, 2025, https://www.linkedin.com/feed/update/urn:li:activity:7298753740558254080/.

Delaware Working Families Party (DE-WFP), Stop Elon Musk’s Corporate Law Bill, https://actionnetwork.org/letters/stop-elon-musks-corporate-law-bill

Public Citizen, Americans for Financial Reform, American Association for Justice, Consumer Federation of America, STOP DELAWARE SENATE BILL 21, https://www.stopsb21.com

Andrew Blumberg, Ben Potts, and Tom James, “Delaware Corporate Law Myth-Busting: The ‘Expanding Definition’ of Controlling Stockholder,” The Harvard Law School Forum on Corporate Governance (blog), February 21, 2025, https://corpgov.law.harvard.edu/2025/02/21/delaware-corporate-law-myth-busting-the-expanding-definition-of-controlling-stockholder/.

Jennifer Kay and Jef Feeley, “Musk’s War on Delaware Spurs State Bill to Hang On to Businesses,” Bloomberg.Com, February 19, 2025, https://www.bloomberg.com/news/articles/2025-02-19/musk-s-war-on-delaware-spurs-state-bill-to-hang-on-to-businesses.

Collin Woodard, “Musk’s New Plan To Get His $56 Billion: Change The Law,” Jalopnik (blog), February 19, 2025, https://www.jalopnik.com/1794019/musks-new-plan-to-get-his-56-billion-change-the-law/.

Dael Norwood, “The Golden Goose Is An Arsonist,” Delaware Business Times, February 19, 2025, https://delawarebusinesstimes.com/news/viewpoints/viewpoint-the-golden-goose-is-an-arsonist/.

Karl Baker and Jacob Owens, “Landmark Delaware Corporate Law Changes Aim to Stem Exits,” Spotlight Delaware, February 19, 2025, http://spotlightdelaware.org/2025/02/19/delaware-corporate-law-change-sb-21/.

Ann Lipton, “Delaware Decides Delaware Law Has No Value,” Business Law Prof Blog (blog), February 18, 2025, https://www.businesslawprofessors.com/2025/02/delaware-decides-delaware-law-has-no-value/.

Jacob Owens, “Meyer Considers Corporate Court Reform, Drawing Concern,” Spotlight Delaware, February 11, 2025, http://spotlightdelaware.org/2025/02/11/meyer-chancery-court-reform/.

Delaware

The Data Does Not Support the Narrative

February 23, 2025 daelnorwood

Or, Why Are Delaware’s Leaders Huffing Musk’s Swamp Gas?

Louis Dalrymple, “Uncle Sam’s Dismal Swamp,” Puck, November 15, 1893, https://www.loc.gov/pictures/resource/ppmsca.29155. Print shows Uncle Sam sitting on a log in a swamp labeled "Spoils System" from which snakes labeled "Quayism", "Bardsleyism", and "Tannerism", and noxious fumes rise in the form of shades labeled "Raumism - Pension Swindler, Crokerism, McLaughlinism, Tweedism, Prendergast - Political Assassin, [and] Guiteau - Political Assassin". Also shown among the tree roots is Charles A. Dana.

The state government of Delaware is in the process of amending its corporate law to benefit Elon Musk, personally, and people like Elon Musk – oligarchic managers who use their control of corporate boards to loot regular investors – more generally. The mechanism is Senate Bill 21, legislation that was drafted by Elon Musk’s attorneys, a fact confirmed by the bill’s filer, Senator Bryan Townsend.

The rationale for this rash action is fear: fear that if Delaware does not extinguish judicial independence to better fit Musk’s perverse desires, Delaware will lose critical revenues, as Musk leads corporations to “DExit,” or registering in other states, because of Chancery Court decisions that since 2022 have supposedly upset the balance of power between shareholders and corporate managers.

The data does not support the panicked narrative that SB 21’s supporters have been promoting, however. That narrative seems to be a product of Musk, and his paid agents, spreading misinformation like a miasma across the state.

Delaware’s Corporate Franchise is a Volume Business

Delaware benefits in several ways from having outside corporations registered here. The most valuable benefit is revenues from the “corporate franchise tax.” This is a fee that corporations headquartered outside the state provide Delaware for the “privilege of being incorporated in Delaware.” (Fiscal Notebook, 2024 ed, p. 108). In recent years, the corporate franchise tax, alone, has provided ~20% of total state revenues, or about 1.2 billion dollars. (Personal income tax, paid by human people, provides 33% of the total state revenue). (Fiscal Notebook, 2024 Ed, p. 32).

The critical thing to know about the corporate franchise tax is that it is not an income tax: it’s a set of tiered fees, assessed based on a corporation’s total number of authorized shares – but with a max payment cap of $250,000.

In other words, Delaware is in a volume business, not a value business. Delaware has – or rather, should have – an interest in appealing to the largest number of corporate registrants, not the wealthiest billionaires. That’s a critical point, because the interests of most corporations – and most investors – do not align much at all with the desires of oligarchs like Elon Musk. If it wants revenue, Delaware shouldn’t be catering to the tiny cohort of vampires.

Back to Delaware politicians’ panic: you would think if the corporate franchise tax revenue is indeed in peril – if the “DExit” movement is real, and not just a propaganda hallucination – then there would be some data to support that claim.

Alas for Musk et al., and their well-paid agents, three data points suggest the opposite is true.

1) Startups Continue to Choose Delaware

Peter Walker, “head of insight” at Silicon Valley data infrastructure firm Carta, recently shared a chart from his company’s private dataset demonstrating that 90% of startup C-Corps are domiciled in Delaware – a percentage that has “barely shifted in the last 5 years.” Including in 2024.

Source: Peter Walker, “Is Delaware Losing Startup Incorporations to Other States? … (No),” LinkedIn (blog), February 21, 2025, https://www.linkedin.com/feed/update/urn:li:activity:7298753740558254080/.

2) The Number of Corporations Filing Franchise Taxes Keeps Going Up

The most recent public figures show that 309,911 firms filed franchise tax payments in FY 2024 – an increase that continues the unbroken upward trend of the last decade, before the recent Chancery Court decisions, and then through and beyond them.

A bar chart showing a steady increase in the number of franchise tax filers from 2015 to 2024. Annual Comprehensive Financial Report, FY 2024 (Delaware Department of Finance, Division of Accounting, 2024), p.206.

Source: Annual Comprehensive Financial Report, FY 2024 (Delaware Department of Finance, Division of Accounting, 2024), p.206

Now, total corporate franchise tax receipts have dipped, somewhat, from 2023 to 2024. But they have done so following the same patterns as the Corporate Income Tax.

Source: “Tax Receipts: Corporate Franchise Tax,” and “Tax Receipts: Corporate Income Tax,” in Fiscal Notebook FY 2024 ed., pp. 109, 115

That suggests to me that the cause lies in macroeconomic conditions – unemployment, inflation – rather than anything to do with Delaware’s legal regime. (Corporations paying income tax here do business here; they can’t exit as easily as paper registrants, and have less incentive to do so).

3) DEFAC Forecasts Steady Corporate Franchise Tax Receipts

Since 1977, Delaware’s state government has relied on the Delaware Economic & Financial Advisory Council, or DEFAC, for economic forecasts. DEFAC meets quarterly to assess data, and issue guidance – guidance that the General Assembly usually regards as binding on legislation.

At the December meeting, DEFAC forecasts steady franchise revenues for FY 2025, 2026, and 2027. That is consistent with economic indicators – at least, prior to Musk’s installation as co-president – and suggests this expert body saw no threat in the data of the sort SB 21’s draftees were already hallucinating.

Musk’s Pungent Miasma is Not Reality

In short, private and public data sources agree: there is no observable decline in incorporations in Delaware, and no evidence that “DExit” is occurring in response to Chancery Court rulings. Further, the advisors specifically tasked with forecasting future franchise tax revenues – that is, a body of people mostly not employed by Elon Musk – do not see evidence for dramatic change.

An alternate explanation does fit the data better, though. Elon Musk’s lawyers drafted SB 21 to benefit their oligarchic clients, not Delaware. Musk’s paid agents are breathing the bad vibe fumes they want to see in the world into existence. The odor of panic they’ve wafted into lawmaker’s nostrils is thus a miasma, in the classic sense: unhealhy and unpleasant air, produced as the unpleasant exhalation of rot and corruption, that causes feverish illness.

Delaware’s leaders should not radically revise our laws, and gut a valuable franchise, on the basis of huffing Musk’s swamp gas.

———-

Header Image source: Louis Dalrymple, “Uncle Sam’s Dismal Swamp,” Puck, November 15, 1893, Library of Congress, https://www.loc.gov/pictures/resource/ppmsca.29155.

Data Sources

Note: while by statute, the heads of Delaware’s state agencies are supposed to provide public reports on things like the total number of corporations registered here, and revenues derived from them, in practice Delaware state government is … uninterested in transparency. Opacity is part of the value Delaware provides, apparently.

The upshot is that basic data, and foundational statistics, are often hard to get, and difficult to parse using normal methods even when located. Still, while our state government officials are intentionally(?) incompetent at communicating to the public, they have not shirked their duties completely; there are sources worth your time & examination.

Delaware Department of Finance, Division of Accounting, Annual Comprehensive Financial Report, FY 2024, https://accountingfiles.delaware.gov/docs/2024acfr.pdf.

While this report is not linked on the DE Finance Department’s page, you can find it at that URL. An annual report, it offers a wealth of up-to-date statistics on the fiscal situation of the government of Delaware, including revenues and expenditures, as well as detailed supplemental information on specific taxes, fees, pension contributions, bond obligations, and subsidiary agencies.

Delaware Fiscal Notebook: 2024 Edition (Delaware Department of Finance, 2024), https://financefiles.delaware.gov/Fiscal_Notebook/2024/2024-Fiscal-Notebook-Combined.pdf. (aka Fiscal Notebook, 2024 ed)

The fiscal notebook is a rehashing of much of what is in the ACFR, but summarized and more richly contextualized look at the state budget, with historical data and legislative histories. If you want to know when the corporate income tax changed, and under what legislation, the Fiscal Notebook is your guide. It has some charmingly 1990s graphic design, as well. Prior reports are available here.

Delaware Economic & Financial Advisory Council (DEFAC), https://finance.delaware.gov/financial-reports/defac-revenue-forecast/ 

DEFAC posts cryptic briefing books and terse meeting minutes, grouped by date, on this page. If you dig far enough, you can find their predictions; and if you want a bit of fun, take a look at how far off they were in their predictions (usually they underestimate revenues by quite a bit, and overestimate the cost of expenditures; there appears to be a spirally structural austerity built into their models, assuming any models actually exist beyond intuition).

Delaware Division of Corporations, https://corp.delaware.gov/

In theory, under the law, this page should contain the division’s up-to-date annual reports, detailing numbers of business entities registered in Delaware, and other pertinent information. In practice, this website is a wasteland.