As the state of incorporation for more than two-thirds of all Fortune 500 companies, Delaware is often considered the de facto corporate capital of the United States. After all, Delaware corporate laws are clear and well developed by a preeminent business court with an extremely sophisticated bench. This has long fueled the perception that Delaware’s corporate laws are favorable for businesses.

But perceptions change. Motivated at least in part by Delaware court decisions adverse to corporations and/or their D&Os—chief among them, the Delaware Court of Chancery’s rejection of Tesla CEO Elon Musk’s $50B compensation package—some companies (reportedly including Meta) are considering reincorporating elsewhere, while other companies, such as Musk’s Tesla and SpaceX, have already done so.

To quell the corporate exodus, dubbed “DExit,” Delaware lawmakers recently passed, and Delaware’s governor recently signed into law, SB 21. Among other things, SB 21 amends the Delaware General Corporation Law (DGCL) by providing a process for boards to invoke safe harbor protection from liability over potentially conflicted transactions for directors and controlling stockholders. The amendments also significantly alter shareholder inspection rights under DGCL Section 220, including by narrowly defining the scope of materials that a corporation might have to produce for inspection, and by effectively empowering courts to consider the entirety of produced materials in litigation, where a stockholder’s complaint might only misleadingly cherry-pick facts from such materials.

Only time will tell whether these amendments actually curb D&O shareholder litigation and, relatedly, whether the plaintiffs’ bar seeks to evade SB 21’s strictures by, for example, repurposing allegations into novel theories of liability. For now, insureds would be well-advised to continue working with an experienced D&O broker to optimize coverage, regardless of where the company is incorporated or otherwise organized.

In March 2022, the SEC issued SAB 121, requiring banks and financial institutions providing custodial services for digital assets—such as cryptocurrencies—to record these customer-held assets as liabilities on their balance sheets. This accounting treatment artificially inflated banks' liabilities, negatively affecting critical financial metrics such as capital adequacy and leverage ratios. Consequently, banks became hesitant to offer digital asset custody due to increased capital reserve requirements and potential misinterpretation of their financial health by regulators and investors.

Critics argued SAB 121's consequences were intentionally restrictive and politically driven, aiming to discourage banks from entering the digital asset custody space without input from banking regulators. In response, the SEC recently rescinded SAB 121 by introducing SAB 122, aligning the accounting treatment of custodial digital assets with traditional custodial practices.

The repeal significantly reduces market uncertainty and systemic risk, encouraging banks and financial institutions to more actively participate in digital asset custody services. Greater bank participation decreases operational, regulatory, and reputational risks for firms and their D&Os, enhancing access to traditional banking services and fostering a more favorable environment for obtaining D&O insurance coverage for companies engaging with digital assets.