ANALYSIS: Delaware Amendments Aim to Halt ‘MFW Creep’

Delaware lawmakers in February introduced a bill that proposes sweeping changes to the state’s corporate law. The amendments would effectively pare back shareholder lawsuits dealing with conflicted, controlling shareholders by lowering the level of scrutiny required for transactions involving these controllers.

Senate Bill 21 seeks to curb “MFW Creep,” a phrase that originated with a 2013 case that opened the door for enhanced judicial scrutiny of controlling stockholder transactions.

Many Delaware legal watchers are focused on whether these amendments embody a legislative capitulation to controlling shareholders like Elon Musk, who have either moved or threatened to reincorporate their companies outside ...