2025 SEC and Other Corporate Law Developments Affecting Public Companies
This memorandum summarizes and discusses several significant developments in corporate and securities laws in 2025 that impact public companies. These developments include public company disclosure and compliance requirements enacted by the Securities and Exchange Commission (the “SEC” or “Commission”); SEC enforcement actions; notable changes to Delaware corporate law, including amendments to the Delaware General Corporation Law (“DGCL”); and rulemaking by the New York Stock Exchange (“NYSE”) and Nasdaq Stock Market (“Nasdaq”).
1. AI-Washing Enforcement Actions.
The emergence of artificial intelligence technologies has resulted in the Commission increasing its focus on “AI-washing,” which is the practice of exaggerating or fabricating the role of artificial intelligence in a company’s products or operations. Former SEC Chair Gary Gensler warned in a 2024 speech that investors are again at risk of being misled: “Fraud is fraud, and bad actors have a new tool, AI, to exploit the public.” Former SEC Enforcement Director Gurbir Grewal agreed, emphasizing that statements regarding AI are subject to the same antifraud provisions that apply to financial metrics or operational claims. The agency’s view reflects both the surge in investor enthusiasm for AI-linked companies and the understanding that such claims often influence investor enthusiasm.
The Commission’s view on AI washing is clear in In re Presto Automation Inc., Securities Act Release No. 33-11352 (Jan. 14, 2025). Presto, a restaurant-technology company who described its voice-ordering platform as “AI-driven” allegedly relied on offshore human contractors to process most transactions and lacked the autonomous processing capabilities investors would reasonably infer from its disclosures. Without admitting or denying the findings, the company agreed to a cease-and-desist order and to enhance its disclosure controls over technology representations. The order is significant, as it explicitly labels a misstatement about artificial intelligence as misleading under the federal securities laws.
Other recent matters – both during the Biden and Trump administrations – underscore that regulators view AI exaggeration as part of a broader pattern of deceptive marketing. For example, in March 2024, the SEC settled proceedings against two registered investment advisers, Delphia (USA) Inc. and Global Predictions Inc., for misleading claims that their investment advice was “powered by” artificial intelligence. In reality, Delphia had not yet integrated client data into an AI model, and Global Predictions lacked the operational system described in its promotional materials. Both firms were censured and paid a combined $400,000 in penalties. The following summer, the SEC and DOJ charged Ilit Raz, founder of the recruiting-technology startup Joonko, with defrauding investors through false statements about the company’s “AI-driven” platform and customer base, after raising more than $20 million on those claims. Furthermore, in April 2025, the SEC filed a civil complaint, and the U.S. Attorney for the Southern District of New York filed parallel criminal charges, against Albert Saniger, founder of the shopping-app Nate Inc., alleging that the company raised $42 million in part by claiming its retail transactions were automated by AI, when they were, like Presto, actually processed manually by overseas contractors (SEC v. Saniger, No. 1:25-cv-02937 (S.D.N.Y. filed Apr. 9, 2025)). Although Nate and Joonko were private companies, both matters illustrate the government’s willingness to treat exaggerated AI statements as actionable fraud. Finally, outside the regulatory enforcement context, investor litigation is emerging with respect to AI washing. For example, a securities-class-action against Innodata Inc. (commenced in 2024 but continuing in 2025) alleges that Innodata overstated the capabilities of its “Goldengate” AI platform, noting that a 30 percent drop in the stock price occurred when this alleged misrepresentation became public.
While the current Commission has not publicly reiterated the views of former Commission officials noted above, recent cases, including Saniger, demonstrate that the Staff continues to apply existing antifraud principles to AI representations on a case-by-case basis. Accordingly, public companies should approach AI references in the same way they treat quantitative or operational disclosures: verify each statement, document the factual bases, and avoid overly aspirational language or touts that state or imply functionality that does not yet exist. As market enthusiasm for AI continues to drive valuations, the Commission appears very focused on ensuring that such claims are accurate, specific, and not misleading.
2. Climate Disclosure Rules.
On March 6, 2024, the Commission adopted final rules requiring registrants to provide standardized information on climate-related governance, risk management, and greenhouse-gas emissions (material Scope 1 and/or 2 emissions for large accelerated and accelerated filers, with SRCs/EGCs exempt). This rule, the SEC’s first line-item climate disclosure regime, sought to align elements of existing SEC disclosure regimes with the Task Force on Climate-Related Financial Disclosures structure and to introduce limited-assurance requirements for emissions data. Within weeks of adoption, multiple petitions for review were filed in various circuits, later consolidated in the Eighth Circuit, asserting that the SEC had exceeded its statutory authority and violated, among other things, the “major questions” doctrine. In response to that wave of challenges, the Commission voluntarily stayed the rule’s effectiveness on April 4, 2024 to prevent implementation uncertainty while litigation proceeded.
After the SEC withdrew its defense, several states and the District of Columbia intervened to uphold the rules and asked the Eighth Circuit to hold the cases in abeyance while the Commission determined whether to rescind, revise, or resume defending them. On April 24, 2025, the court granted abeyance and directed the SEC to report on whether it intended to review or reconsider the rules, whether it would adhere to them if challenges were denied, and, if not, why reconsideration was inappropriate. In its July 2025 status report, the Commission said it did not intend to review or reconsider the rules “at that time” and requested that the Eighth Circuit proceed to decide the merits to inform any future agency action, without committing to adherence should the rules survive review – a stance that drew a pointed dissent from Commissioner Crenshaw. On September 12, 2025, the court again placed the litigation in abeyance, emphasizing that the SEC bears the responsibility to determine whether its final rules will be rescinded, repealed, modified, or defended; absent a renewed defense, the case will remain paused.
The Commission’s 2024 final rule on climate-related disclosures remains stayed and now sits in a procedurally unusual posture. For registrants, the net result is continued federal uncertainty coupled with persistent expectations from investors and international/state regimes. Even while the federal rules are stayed and undefended, the SEC’s Division of Corporation Finance has signaled, through sample comment letters and public statements, that existing Regulation S-K Items 101, 103 and 303 already capture material climate-risk disclosures, and companies should expect Staff scrutiny of consistency across MD&A, risk factors, and voluntary sustainability reporting. Meanwhile, state and international regimes (e.g., California’s SB 253/SB 261 and the EU’s CSRD/ESRS) continue to move forward on their own timetables, with disclosure scopes that in some cases exceed the stayed SEC rules. The Commission’s litigation posture suggests no near-term federal mandate, but the court-ordered abeyance and periodic status reporting leave open the possibility of later modification or rescission via rulemaking.
Practice Implications:
- Treat the climate disclosure rules stay as temporary, not terminal. Maintain internal readiness (governance, controls, data architecture) so the company can pivot if the Commission reopens rulemaking or if litigation restarts.
- Anchor disclosure in existing Regulation S-K rules. Ensure climate risk is addressed where material under Items 101, 103, and 303, and that voluntary sustainability statements align with SEC filings.
- Plan around non-federal regimes. Track applicability and timelines for California SB 253/SB 261 and EU CSRD/ESRS; harmonize metrics and definitions where feasible to avoid inconsistency.
- Board oversight and disclosure controls. Keep minutes and materials demonstrating board-level oversight and management processes for climate risk as these are frequently the basis of SEC comments even absent a federal line-item rule.
3. SEC No-Action Letter on Retail Shareholder Voting Programs.
In September 2025, the SEC Division of Corporation Finance issued a no-action letter to Exxon Mobil Corporation granting limited relief for a proposed retail shareholder standing-voting-instruction program (Exxon Mobil Corporation, SEC No-Action Letter, Sept. 15, 2025). The request arose from Exxon’s effort to expand participation among individual investors who often receive proxy materials but do not submit votes. The company sought to permit retail holders to establish standing voting preferences for recurring categories of shareholder proposals, which would be applied automatically in future proxy solicitations absent a change or withdrawal by the shareholder.
The Division stated that it would not recommend enforcement under Exchange Act Rules 14a-4(d)(2) and 14a-4(d)(3) if Exxon implements the program as described in its request. Those rules ordinarily restrict the use of discretionary authority to vote on matters not specifically identified in the proxy card. Under the relief, Exxon may invite eligible shareholders to opt in voluntarily and specify advance instructions governing how their shares should be voted on particular proposal types, such as board-nominated director elections, say-on-pay resolutions, or certain environmental or governance matters.
The no-action relief was conditioned on several specific safeguards, including:
- Participation is entirely voluntary and cost-free for retail shareholders, whether they hold shares in registered or beneficial form.
- Investors must affirmatively enroll and provide or update their instructions through the company’s or its transfer agent’s secure platform.
- Standing instructions must be reconfirmed periodically, no less frequently than every two years, to remain valid.
- Each year’s proxy materials will clearly disclose the existence of the program, the categories of proposals covered, and the method for modification or revocation.
The Exxon letter underscores that, with appropriate safeguards, a standing-instruction framework can operate consistently with the proxy-solicitation rules while advancing shareholder-participation objectives. Although the relief is expressly limited to Exxon’s program, it provides a potential model for other issuers seeking to facilitate retail participation and reduce chronic under-voting among individual holders. Companies considering similar initiatives will need to evaluate whether their proposed features, particularly the opt-in process, confirmation cycle, and disclosure language, track the conditions that supported the Staff’s determination.
At the same time, the Division emphasized that its position is fact-specific and does not constitute a general exemption or interpretive rule. Future requests will likely be assessed case by case, and broader adoption of retail-voting programs may depend on additional rulemaking or industry standard-setting. Investor advocates and corporate-governance groups have already begun debating whether standing instructions could influence the balance of power among institutional and retail holders or alter the character of annual-meeting participation.
Collectively, the Staff’s response signals openness to experimental mechanisms for increasing retail engagement while preserving the integrity of the proxy-solicitation process. It may mark an incremental step toward broader modernization of proxy mechanics but stops well short of signaling a general regulatory safe harbor.
4. Short-Sale Reporting Rules.
In SEC Release No. 34-98738 (October 13, 2023), the Commission adopted new Exchange Act Rule 13f-2 and related Form SHO, establishing a short-sale-transparency framework intended to provide regulators and the public with more timely information on short-selling activity. The rule applies to “institutional investment managers” as defined in Exchange Act § 13(f)(6)(A) – an institutional investment manager is any person, other than a natural person, investing in or buying and selling securities for its own account, and any person exercising investment discretion with respect to the account of any other person (e.g., brokers and dealers, investment advisers, banks, insurance companies, and pension funds) – that meet the reporting thresholds (“Manager”). Rule 13f-2 requires Managers to file a Form SHO if it holds monthly average gross short positions with a U.S. dollar value of at least $10 million and/or monthly average gross short positions equal to 2.5% or more of a security’s total shares outstanding (with different, higher thresholds for non-reporting issuers). Managers must file Form SHO with the Commission within 14 calendar days after each month-end, reporting daily short-sale activity and end-of-month positions for each equity security.
On February 7, 2025, the Commission issued a temporary exemptive order delaying compliance with Rule 13f-2 and Form SHO until January 2, 2026, to allow institutional investment managers additional time to build and test reporting systems. As a result, no Form SHO filings were required for 2025 activity, and the first Form SHO submissions will be due February 17, 2026, covering short-sale activity for January 2026. The SEC has indicated that aggregated public reports will not be published until after the first filing cycle in 2026. When the SEC begins publishing aggregated data in 2026, Manager identities will be withheld, consistent with the Commission’s conclusion that such data remain proprietary.
The SEC’s Division of Examinations has identified trading-related practices (including short-selling and related exemptions under Regulation SHO) as a focus area for FY2025 examinations. While currently no publicly-disclosed sweep or enforcement initiative specific to Form SHO compliance has been announced and no enforcement actions have been brought, the staff has emphasized that filing failures or inaccurate submissions may constitute violations of Rule 13f-2 and the Exchange Act. Managers subject to Form 13F reporting should therefore integrate short-position tracking with long-position systems and maintain consistent security identifiers to avoid discrepancies between Forms 13F and SHO.
Practice Implications:
- Managers should confirm that their compliance and reporting infrastructure can generate accurate daily short-sale data within the required fourteen-day window, apply consistent 2.5 percent threshold calculations across affiliated accounts, and retain transaction-level records for at least three years depending on the registrant type and the rules.
- Cross-border investment advisers should continue to monitor parallel disclosure initiatives in the EU and U.K. to harmonize reporting obligations and minimize duplicative or inconsistent disclosures.
5. Beneficial Ownership Reporting Rules – Updated SEC Guidance.
In October 2023, the Commission adopted final amendments to the beneficial-ownership reporting framework under Exchange Act Sections 13(d) and 13(g) (SEC Release No. 33-11180), shortening the deadlines for Schedule 13D and Schedule 13G initial and amendment filings, requiring structured, machine-readable data formats, and clarifying derivative-security treatment. The modernized rules, which we previously reported on in our 2023 update memo, became effective in 2024 and remain unchanged. However, in 2025 the SEC’s Division of Corporation Finance issued two sets of new Compliance & Disclosure Interpretations (“C&DIs”) to clarify the application of those rules.
2025 C&DI Updates:
February 11, 2025:
- C&DI 103.11 (revised): Clarifies that an inability to rely on the exemption provided under
Section 801.1(i)(1) of the Hart-Scott-Rodino Act does not alone preclude an investor from filing on
Schedule 13G but an investor who engages with management or directors in a manner reasonably viewed
as seeking to influence control, such as conditioning support for director nominees or governance
changes, may be deemed ineligible to file on Schedule
13G. - C&DI 103.12 (new): Provides that assessing “passive” versus “active” status depends on both the substance and context of engagement; even limited advocacy may evidence a control purpose if linked to board or policy outcomes.
- C&DI 101.01 (updated): Confirms that a holder that has not acquired additional shares since a class of securities became registered under Section 12 may continue to report on Schedule 13G.
- C&DI 101.06 (updated): Clarifies whether the intent to acquire more than 5% in beneficial ownership or voting power affects a Schedule 13D or 13G filing requirement.
- C&DI 103.01 (updated): Clarifies that a 10% holder may file on Schedule 13G upon the registration of such securities under Section 12 and includes updated filing deadlines.
- C&DI 103.06 (updated): Explains that certain intra-group transfers may trigger amendment obligations even without net ownership change and includes updated filing deadlines.
- C&DI 103.09 (updated): Clarifies that an investor who receives securities in a spin-off transaction may file on Schedule 13G and includes updated filing deadlines.
- C&DI 103.10 (updated): Clarifies that a Schedule 13D must be filed within 5 business days after the trade date.
These interpretations clarify, but do not alter, the substantive obligations under the 2023 amendments (effective February 5, 2024) and emphasize accurate, timely, and context-specific disclosure of beneficial ownership and coordinated investor activity.
6. EDGAR Next Enrollment and Filing Credential Transition.
The Commission’s ongoing modernization of its electronic filing system, known as EDGAR Next, entered its implementation phase in 2025, with mandatory filer enrollment now underway. Although the transition has been described as procedural, it carries material operational consequences for all EDGAR users, including public companies, investment vehicles, and filing agents.
Adopted in September 2024 (EDGAR Filer Access and Account Management, Rel. Nos. 33-11313; 34-101209), EDGAR Next retains the Central Index Key (“CIK”) as the filer’s unique identifier and continues to require a CIK Confirmation Code (“CCC”), but modernizes access by requiring individual Login.gov multifactor authentication credentials and a filer-level dashboard with account administrator and user roles. Each filer must designate account administrators, approve user roles, and link their existing CIK by providing the current CCC and passphrase during enrollment. The objective is to improve credential security, auditability, and control over delegated access to outside service providers.
In 2025, the SEC announced that beginning September 15, 2025, filers that have not enrolled in EDGAR Next (or have not obtained EDGAR access through a Form ID granted on or after March 24, 2025) will no longer be able to make filings until they complete enrollment. After that date, filers may continue to enroll until December 19, 2025, but they will not be able to file until they complete such enrollment, which may be done using an existing CIK number. After the enrollment period ends at 10 p.m. Eastern Time on December 19, 2025, filers will be unable even to access their EDGAR accounts unless they submit a new Form ID application for EDGAR access. Since the process of filing a Form ID application – essentially as if a filer is a new user – is a significantly more burdensome and time-consuming process than linking an existing account, it is critical that any filers who have not already enrolled in EDGAR Next do so prior to the enrollment period ending.
The enrollment process typically requires:
- Designation of at least one account administrator with authority to approve or remove user access, although having more than one account administrator is advisable.
- Enrollment for individuals in Login.gov in order to access EDGAR Next, which process includes multifactor-authentication setup for the user.
- Linking of all associated CIKs and confirmation of filer profile information.
- Verification through SEC e-mail notifications to the filer’s account administrators and point-of-contact email on record.
- Filers must complete an annual confirmation on the dashboard; account administrators select the quarter-end date during enrollment.
Filers should allow sufficient time for internal coordination, particularly where third-party filing agents or law firms manage EDGAR submissions on the issuer’s behalf. Once enrollment is complete, account administrators may delegate to financial printers/filing agents the authority to make filings in the filers behalf. In this way, once enrollment has been completed, filings may proceed in much the way they had been made previously in the EDGAR system.
7. Emerging Disclosure Topics – Crypto-Asset-Related Developments.
On July 1, 2025, the SEC’s Division of Corporation Finance issued a Statement on Crypto-Asset Exchange-Traded Products (ETPs) addressing disclosure expectations for sponsors of such vehicles, which include certain exchange-traded funds (ETFs). The Staff highlighted four principal areas of focus: (i) clear description of each underlying crypto asset and its associated network; (ii) policies governing how the assets are held, safeguarded, or otherwise used (for example, staking or similar activities); (iii) transparent discussion of material risks specific to the crypto assets and markets – such as volatility, custody vulnerabilities, or network integrity; and (iv) tailored presentation of the product’s investment objective and the methods used to value and account for the assets. Although directed to ETP sponsors rather than operating public companies, the Statement may be potentially instructive for issuers that hold (or in the future may hold) crypto assets on their balance sheets, and underscores the importance of concise, fact-specific disclosure describing the nature of those holdings, how they are custodied, and the risks associated with their valuation and use.
8. SEC Considers Reduction in Periodic Reporting Frequency.
In September 2025, President Trump asked the SEC to consider permitting public companies to reduce their periodic financial reporting from quarterly to semi-annually. Subsequently, SEC Chair Paul Atkins expressed strong support for such a change and indicated that the Commission would study this initiative and consider whether to develop a formal proposal. His statements further suggest that such a proposal may not be released until late 2025 or early 2026, likely to be followed by a customary period for public comment.
The new approach would not necessarily eliminate quarterly reporting entirely but instead allow issuers, on an optional basis, to report twice yearly. Supporters contend that reduced frequency could lessen compliance costs and mitigate “short-termism,” while some critics warn that longer reporting cycles could decrease transparency and delay dissemination of material developments. While any change to the reporting cycle for public companies would be extremely significant, at this stage, the initiative remains exploratory in nature, no rule proposal has been issued, and any change would likely require extensive formal rulemaking to amend Exchange Act reporting provisions.
9. Delaware Corporate Law Developments – 2025 DGCL Amendments.
The Delaware General Assembly enacted two major bills in 2025 enacting significant amendments to the Delaware General Corporation Law (“DGCL”): Senate Bill 21 (SB 21) and Senate Bill 95 (SB 95). These two bills represent one of the most comprehensive revisions to the DGCL in recent years. SB 21, effective March 25, 2025, overhauls Section 144, including a two-track regime for controller transactions and refines books-and-records procedures. SB 95, signed June 30, 2025 and effective August 1, 2025 (except certain tax provisions effective January 1, 2026), implements numerous technical and harmonizing updates. Together, the bills reflect the continuing effort of the Delaware Corporation Law Council, a group within the Delaware State Bar Association that reviews and recommends changes to the DGCL, to codify evolving judicial practice while streamlining corporate procedures.
SB 21:
a. Section 144 — Interested Director and Officer and Controlling Stockholders Transactions. Senate Bill 21 substantially revises Section 144 of the DGCL, which historically governed transactions involving interested directors, officers, and controlling stockholders. The new framework divides Section 144 into three principal parts. Section 144(a) addresses acts or transactions involving or between the corporation and an interested director or officer. Section 144(b) governs acts or transactions involving or between the corporation and a controlling stockholder, other than “going private” transactions. Section 144(c) addresses “going private” transactions involving a controlling stockholder. Each subsection replaces the former “void or voidable” standard with a clear statement that an interested director, officer, or controlling
stockholder will not be subject to equitable relief or damages if the corporation satisfies the safe-harbor requirements set forth in the applicable subsection.
While these amendments are rooted in what has become known as the “MFW doctrine,” they both formalize and narrow its application. Under Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014), a controller transaction could obtain business-judgment review only if it were conditioned, from the outset, on both (i) approval by an independent, fully empowered special committee of directors and (ii) approval by a majority of disinterested stockholders. Subsequent decisions, culminating in In re Match Group, Inc. Derivative Litigation (“Match Group II”), 2024 WL 1449815 (Del. Apr. 4, 2024), extended that dual-condition framework beyond “going private” mergers to other controlling-stockholder transactions that conferred a non-ratable benefit on the controller. The 2025 DGCL amendments to Section 144 recalibrate that approach. They confirm that the requirement for both of the procedural protections under MFW applies only to “going private” transactions under Section 144(c), while for other controller transactions under Section 144(b), business-judgment review may be obtained by satisfying either of the MFW procedural mechanisms independently (approval by a qualified special committee or by a majority of disinterested stockholders), which need not be at the outset.
In effect, the statutory framework rolls back the expansion of the MFW doctrine reflected in Match Group II, restoring greater flexibility for boards and controllers to structure conflicted transactions under business-judgment review without satisfying both prongs of MFW. The provisions of amended Sections 144 (a), (b) and (c) are discussed in greater detail below.
Interested Director and Officer Transactions (Section 144(a)). Revised Section 144(a) provides that an act or transaction involving interested directors or officers is insulated if, upon disclosure or in full knowledge of material facts, it is (i) approved or ratified by a majority of disinterested directors or (ii) approved or ratified by a majority of votes cast by disinterested stockholders. For interested-director transactions, only one of these procedural protections is required; however, going private controller transactions remain subject to dual approval. The Court of Chancery retains discretion to review the adequacy of the process, particularly independence,
disclosure, and fairness, but the categorical presumption of entire fairness review is eliminated when one valid route to approval has been satisfied. The change is expected to reduce duplicative litigation focused on technical compliance with both procedures and to center judicial analysis on the integrity of the chosen process.
Interested Stockholder Transactions (Other Than Going Private Transactions) (Section 144(b)). New Sections 144(b) and (c) add safe-harbor pathways for controlling stockholder transactions (with definitions for controlling stockholder and control group as well as specified independence/disinterestedness criteria). Under Section 144(b), non–going private controlling stockholder transactions may be insulated if approved/recommended by a committee of a majority of disinterested directors or approved/ratified by a majority of votes cast by disinterested stockholders.
Section 144(e) also codifies the definitions of “controlling stockholder” and “control group” for the first time in statutory text. These definitions track Delaware case law but provide statutory clarity on when multiple stockholders may be treated as a single control group. These changes to Section 144(b) allow a controller transaction (other than a “going private” transaction) to obtain business judgment review by satisfying either procedural safeguard – i.e., a qualified special committee approval or a majority-of-the-minority vote, rather than both. The safe harbor is available so long as the approval or ratification occurs before the transaction becomes effective.
Interested Stockholder Transactions (Going Private Transactions) (Rule 144(c)). Under Section 144(c), “going private” controlling stockholder transactions (as defined) require both: (i) negotiation/approval by a committee of a majority of disinterested directors and (ii) approval/ratification by a majority of votes cast by disinterested stockholders.
Section 144(e) cross-references Exchange Act Rule 13e-3 to define a “going private” transaction and Section 144(c) expressly requires satisfaction of both procedural protections – i.e., approval by an independent, fully empowered special committee and approval by a majority of disinterested stockholders – to obtain business judgment review. The Court of Chancery retains discretion to deny safe harbor protection if the independence, authorization, or disclosure requirements are not met.
Change from Prior Practice. The 2025 amendments depart from MFW and subsequent case law in two principal respects:
- A special committee must consist of a majority, rather than all, independent directors, and it may be formed after negotiations begin, provided it is ultimately fully empowered to evaluate, negotiate, and approve the transaction.
- The statutory safe harbor protections of Sections 144(b) and (c) are available even if the controller did not condition the transaction ab initio on both procedural protections, so long as the requisite approval or ratification occurs before effectiveness. These adjustments afford greater flexibility in structuring conflicted-controller transactions while maintaining procedural integrity sufficient for business-judgment review.
Practice Points:
- Boards and counsel should confirm that approval processes for transactions involving interested directors, officers, or controlling stockholders are well documented, including disclosure of all material facts and reliance on independent advice where appropriate.
- For controller transactions, determine early whether to proceed under the single-path framework of Section 144(b) (approval by either a qualified special committee or a majority-of-the-minority vote) or the dual-protection framework of Section 144(c) for “going private” transactions.
- Ensure that any special committee is composed of at least a majority of independent directors, is fully empowered, and maintains a clear record of its deliberations and advice received.
- Update board and committee charters, conflict-of-interest policies, and disclosure controls to reflect the revised statutory safe harbors and to align procedural documentation with the business-judgment review standards contemplated by the amended statute.
b. Section 220 — Books and Records Inspection. SB 21 also amends Section 220 to streamline and modernize stockholder inspection practice. The amendments clarify permissible inspection categories, codify proportionality and confidentiality principles, and align Section 220 with recent Chancery practice. They reaffirm that stockholders may seek documents relevant to potential wrongdoing, but production may be limited to materials essential and sufficient to accomplish the stated purpose. The amendments further codify case law holding that, where formal board-level records such as minutes or written consents exist, inspection ordinarily will not extend to directors’ or officers’ personal communications (e.g., emails or text messages). These revisions reflect the Court of Chancery’s emphasis on proportionality and are designed to reduce motion practice over evidentiary form, leading to greater reliance on written submissions and fewer disputes over authentication or witness availability.
Practice Points:
- Companies responding to inspection demands under Section 220 should update internal protocols to incorporate electronic submissions and declarations.
- Corporate secretaries and outside counsel should verify that charter and restatement procedures comply with the revised filing mechanics and that record-keeping systems can accommodate electronic fractional-share issuance.
SB 95:
c. Section 278 and Section 312 — Revival of Voided Corporations. The 2025 amendments also harmonize Sections 278 and 312 to clarify the revival process for corporations whose charters have become void for non-payment of franchise taxes. A revived corporation now continues as if its charter had never been voided, but the amendments clarify the revival process and continuity of corporate existence, without addressing liability effects during the void period. The change codifies existing practice while ensuring uniform treatment across corporations and limited-liability entities.
d. Section 155 and Section 158 — Fractional Shares and Stock Certificates. SB 95 updates these provisions to confirm that corporations may issue fractional shares or scrip electronically and that such interests may, at the corporation’s option, be settled in cash or other consideration. The amendments reflect Delaware’s ongoing move toward dematerialized record-keeping and align corporate practice with the electronic-transaction standards already adopted in the LLC and LP Acts.
DGCL Amendments In Context:
These 2025 amendments to the DGCL also arrive at a time of heightened interstate competition for incorporation of new companies (and possible reincorporation of existing ones). Nevada and Texas have each sought to attract incorporations through legislation emphasizing reduced liability exposure, procedural predictability, and lower ongoing costs. By contrast, Delaware’s statutory revisions, particularly the new safe harbors under Section 144 and refinements to Section 220, underscore a continuing focus on predictability while reinforcing the state’s reputation for expert, balanced governance law.
10. NYSE and Nasdaq Developments.
Set forth below is a discussion of significant new or amended rules of the NYSE and Nasdaq that were approved by the SEC in 2025 or which became substantially effective in 2025.
NYSE
Reverse stock splits and minimum price compliance (Section 802.01C)
In January 2025, the SEC approved NYSE amendments to Section 802.01C of the NYSE Listed Company Manual that restrict the ability to use reverse stock splits to regain compliance with the $1.00 minimum share-price continued-listing standard. The revised rule provides that a company is ineligible for a standard cure period and is subject to immediate suspension/delisting if it has: (i) effected a reverse split within the past one year, or (ii) effected one or more reverse splits over the prior two years with a cumulative ratio ≥ 200:1. The amendment is intended to deter serial or extreme reverse splits used solely to address bid-price deficiencies.
Practice Implications:
- Issuers considering a reverse split to cure Section 802.01C deficiencies should model the lookback and cumulative-ratio tests and avoid triggering the immediate-delisting conditions.
- Boards should document the business rationale for any reverse split and confirm post-split compliance with all continued-listing criteria (not just price).
Nasdaq Stock Market
Reverse stock splits and minimum bid-price framework (Rule 5810(c)(3)(A))
Effective January 2025, the SEC approved Nasdaq’s changes to Rule 5810(c)(3)(A) that (i) tighten the compliance-period mechanics for the $1.00 bid-price standard and (ii) address reverse split misuse. Under the amended rule, if an issuer undertakes a corporate action (e.g., a reverse split) to cure the bid-price deficiency and that action causes a new deficiency under another Nasdaq standard (for example, public float or publicly-held shares), the company is not deemed cured on bid price, and no compliance period is available for the other standard; the company remains non-compliant on bid price until the other deficiency is cured and faces delisting if both are not cured within the bid-price compliance period. Unlike the NYSE’s 200-to-1 cumulative ratio threshold, Nasdaq’s amended Rule 5810(c)(3)(A) applies a 250-to-1 cumulative ratio over a two-year look-back period and also bars reliance on any reverse split completed within the prior one year. The amendments also introduce frequency/ratio-based limits on repeat reverse splits as part of the compliance strategy.
Practice Implications:
- Nasdaq’s framework requires companies to evaluate secondary listing effects of a reverse split (e.g., round-lot holders, publicly-held shares).
- Cure plans should address all quantitative standards to avoid being deemed non-compliant notwithstanding a post-split price above $1.00.
Board-diversity disclosure rules repealed following Fifth Circuit decision
After the Fifth Circuit (en banc) vacated the SEC’s 2021 approval of Nasdaq’s board-diversity rules in December 2024, Nasdaq filed to repeal the diversity matrix and related “comply-or-explain” provisions. The SEC approved Nasdaq’s repeal request, with an operative date of February 4, 2025. As a result, Nasdaq-listed companies are no longer subject to the exchange’s board-diversity disclosure or target provisions; any diversity disclosures now derive from SEC or other-law requirements, not from Nasdaq rules.
Practice Implications:
- Issuers may continue to disclose board-composition data in proxy statements due to investor expectations or other regimes, but the Nasdaq requirement has been removed.
- Companies should review boilerplate to eliminate references to the repealed Nasdaq matrix.
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We will be pleased to respond to questions or otherwise assist you in responding to the developments discussed in this memorandum.
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