Rick Horvath (Dechert): What Corporate Directors Need to Know About Delaware's SB 21

May 12, 2025

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(0:00) Intro

(1:14) About the podcast sponsor: The American College of Governance Counsel

(2:01) Start of interview

(4:38) His professional background starting with Skadden in Delaware.

(5:08) About his corporate governance practice at Dechert LLP

(8:10) How Delaware Came to Dominate U.S. Incorporations

(13:14) What prompted the pushback against Delaware

(15:12) The Tornetta v Musk decision (Elon Musk CEO compensation rescission)

(18:40) The Rationale Behind the Governor and Legislature’s Support for SB21 in Delaware.

(22:38) Changes to Controlled Stockholder Transactions and the Definition of a Controller (Safe Harbor Provision under Section 144)

(24:18) Doctrine of Transaction-Specific Control (reference to paper by Pollman and Will, 2025)

(26:06) Explaining the MFW Doctrine, a Delaware law concept that provides a pathway to business judgment review for transactions involving a controlling stockholder, instead of the more rigorous "entire fairness" review (pre SB-21). "The view had become the MFW doctrine was creating both litigation risk and deal uncertainty."

(30:45) Changes to Section 220 Shareholder Inspection Rights by SB21.

(34:04) Will SB21 stem the tide of reincorporations? "I think it is enabling companies that had been looking at moves to pause"

(37:00) Competing States: Nevada and Texas

(40:17) Revisiting Caremark claims (directors' oversight duties). Legal risks vs business risks.

(44:50) Book that has greatly influenced his life: Hagakure (early 1700s, Japan)

(45:47) His mentors:

Mark Thierfelder (Co-Chair, Dechert)
Eric Waxman (Ares Management)
Tom Allingham (former partner at Skadden)

(46:58) Quotes that he thinks of often or lives his life by.

(47:52) An unusual habit or an absurd thing that he loves.

(49:11) The living person he most admires: former Delaware Chancellor William B. Chandler, III.

Rick Horvath is a partner at Dechert LLP in San Francisco and focuses his practice on corporate governance matters.

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