This Amendment amends SS1 to SB21 by excluding from the safe harbor rules of § 144(a) "an act or transaction that involves a sale, breakup, or change in control of the corporation or that otherwise gives rise to appraisal rights under § 262 of this title." This is intended to conform the statute with Kahn v.

Plain English Breakdown

The bill status is definitively defeated; no effective date exists.

Amendment on Corporate Sale and Control Rules

This amendment removes safe harbor protections for corporate sales or changes in control, creates a new category called 'extraordinary transaction' requiring strict approval steps to avoid court review, and expands the definition of transactions where minority shareholders lose control.

What This Bill Does

• Removes safe harbor protection from acts involving the sale, breakup, or change in control of a corporation.
• Excludes transactions that give rise to appraisal rights under section 262 from standard safe harbor rules.
• Creates a new category called 'extraordinary transaction' that requires two specific steps (dual cleansing devices) to avoid court fairness review.
• Expands the definition of 'going private transaction' to include any deal where minority stockholders lose control of their shares.
• Sets financial limits for extraordinary transactions at over $100 million or 20% of corporate assets or stock value.

Who It Names or Affects

• Corporations involved in sales, breakups, or changes in control
• Stockholders who may lose control of their shares
• Transaction planners seeking legal approval for deals

Terms To Know

Safe harbor rules

Legal protections that shield certain actions from strict court review.

Appraisal rights

The right of a stockholder to demand payment for their shares if they disagree with a corporate transaction under section 262.

Extraordinary transaction

A new category of major deals, such as sales or large purchases over $100 million, that face stricter legal review unless specific approval steps are met.

Limits and Unknowns

• The bill was defeated by the House on March 25, 2025, so it did not become law.
• The text does not specify an effective date because the legislation failed to pass.
• The amendment relies on specific Delaware court cases (Kahn v. Stern, Revlon, Corwin) that are referenced but their full details are outside this document.

Official Summary Text

This Amendment amends SS1 to SB21 by excluding from the safe harbor rules of § 144(a) "an act or transaction that involves a sale, breakup, or change in control of the corporation or that otherwise gives rise to appraisal rights under § 262 of this title." This is intended to conform the statute with Kahn v. Stern, 183 A.3d 715 (Del. 2018) and the line of Delaware case law that follows Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986) and Corwin v. KKR Fin. Holdings LLC, 125 A.3d 304 (Del. 2015), to apply enhanced scrutiny review to such transactions unless approved by a fully informed vote of disinterested stockholders. This amendment is intended to preserve the ability of transaction planners to obtain common-law cleansing under Corwin. This Amendment further amends SS1 to SB21 to define an additional category of transaction, called an "extraordinary transaction" under § 144(e) that requires the use of dual cleansing devices to avoid fairness review by the Court. It further amends SS1 to SB21 by amending the definition of "going private transaction" to include any other transaction wherein minority stockholders lose control of their shares.

Current Bill Text

Legislation Document

SPONSOR:

Rep. Wilson-Anton

HOUSE OF REPRESENTATIVES

153rd GENERAL ASSEMBLY

HOUSE AMENDMENT NO. 4

TO

SENATE SUBSTITUTE NO. 1

FOR

SENATE BILL NO. 21

AMEND Senate Substitute No. 1 for Senate Bill No. 21 on line 4 by deleting “

section,

” as it appears therein and inserting in lieu thereof "

section or an act or transaction that involves a sale, breakup, or change in control of the corporation or that otherwise gives rise to appraisal rights under § 262 of this title,

".

FURTHER AMEND Senate Substitute No. 1 for Senate Bill No. 21 on line 32 by deleting “

transaction)

” as it appears therein and inserting in lieu thereof “

or extraordinary transaction)

”.

FURTHER AMEND Senate Substitute No. 1 for Senate Bill No. 21 on line 48 by inserting “

or extraordinary transaction

” after “

private transaction

” and before “

may

” therein.

FURTHER AMEND Senate Substitute No. 1 for Senate Bill No. 21 after line 120 and before line 121 by inserting the following and redesignating accordingly:

“

(6) “Extraordinary transaction” means:

a. Any “business combination” as defined under § 203(c)(3) of this title.

b. Any act or transaction that involves a sale, breakup, or change in control of the corporation or that otherwise gives rise to appraisal rights under § 262 of this title.

c. Any transaction that requires stockholder approval (whether by vote or written consent) under any provision of this title, the corporation’s certificate of incorporation, bylaws, or any plan or agreement to which the corporation is a party.

d. Any tender or exchange offer for shares not held by the controlling stockholder.

e. Any purchase or sale by the corporation in which the consideration, whether in cash or stock, has an aggregate value in excess of the lesser of:

1. $100 million.

2. 20% of either:

A. The aggregate market value of all the assets of the corporation as determined on a consolidated basis.

B. The aggregate market value of all the outstanding stock of the corporation.

”.

FURTHER AMEND Senate Substitute No. 1 for Senate Bill 21 on line 124 by inserting “

or any other transaction in which all shares of a corporation not held by the controlling stockholder or control group are cancelled, converted, purchased, acquired, or exchanged for consideration

” before “

;”

as it appears therein.

SYNOPSIS

This Amendment amends SS1 to SB21 by excluding from the safe harbor rules of § 144(a) "an act or transaction that involves a sale, breakup, or change in control of the corporation or that otherwise gives rise to appraisal rights under § 262 of this title." This is intended to conform the statute with Kahn v. Stern, 183 A.3d 715 (Del. 2018) and the line of Delaware case law that follows Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986) and Corwin v. KKR Fin. Holdings LLC, 125 A.3d 304 (Del. 2015), to apply enhanced scrutiny review to such transactions unless approved by a fully informed vote of disinterested stockholders. This amendment is intended to preserve the ability of transaction planners to obtain common-law cleansing under Corwin. This Amendment further amends SS1 to SB21 to define an additional category of transaction, called an "extraordinary transaction" under § 144(e) that requires the use of dual cleansing devices to avoid fairness review by the Court. It further amends SS1 to SB21 by amending the definition of "going private transaction" to include any other transaction wherein minority stockholders lose control of their shares.