Correction (December 2025):  An earlier version of this article incorrectly referred to “Delaware Senate Bill 154” as the source of recent amendments to the Delaware General Corporation Law. The corporate opportunity and conflict-of-interest updates discussed in the article derive from SB 313 (effective August 1, 2024) and Senate Substitute 1 for Senate Bill 21 (SS 1 for SB 21, signed March 25, 2025), not SB 154. The post has been revised to reflect these statutory references.

Delaware Modernizes Corporate Opportunity and Conflict-of-Interest Law: What California-Headquartered Companies Need to Know

Delaware has again refined the contours of fiduciary duty and corporate governance, this time through two amendments to the Delaware General Corporation Law (“DGCL”): SB 313 (2024) and Senate Substitute 1 for Senate Bill 21 (“SS 1 for SB 21,” 2025). Together, these amendments clarify (1) how corporations may renounce corporate opportunities in advance under DGCL §122(17), and (2) the safe harbors available for cleansing interested-director and controlling-stockholder transactions under DGCL §144. Because many California-headquartered companies are incorporated in Delaware, these updated rules carry important compliance implications for boards, officers, private equity sponsors, venture investors, and in-house counsel.

The corporate opportunity doctrine, grounded in the duty of loyalty, prohibits directors and officers from appropriating certain business opportunities that belong to the corporation unless the corporation first rejects them. Delaware courts have long applied the four-factor test set forth in Broz v. Cellular Information Systems, Inc., 673 A.2d 148 (Del. 1996), examining: (1) whether the corporation is financially able to pursue the opportunity; (2) whether the opportunity falls within the corporation’s line of business; (3) whether the corporation has an interest or expectancy in the opportunity; and (4) whether taking the opportunity would create a conflict between the fiduciary’s duties and personal interests. While this common-law framework has guided boards for decades, modern corporate structures (particularly venture-backed startups, SPACs, multi-entity investment platforms, and private equity portfolio companies) have increased the frequency of overlapping fiduciary roles and competing deal flow.

Delaware first codified advance renunciation of corporate opportunities in 2000 when it adopted DGCL §122(17), empowering corporations to disclaim, in advance, interests or expectancies in specified opportunities. This allows a corporation to authorize certain directors, officers, stockholders, or classes of persons to pursue opportunities without violating fiduciary duties. Importantly, §122(17) expressly permits renunciations even when the corporation is first presented with the opportunity, providing broader protection than the common-law framework alone.

SB 313, effective August 1, 2024, updated §122 and introduced new §122(18), confirming that corporations may enter into contracts with stockholders and others concerning governance arrangements. Section 122(18) was enacted in the wake of the Court of Chancery’s Moelis decision, and clarifies the corporation’s statutory authority to enter into governance-related agreements that might otherwise have been viewed as ultra vires. The amendments did not overhaul §122(17), but they reinforced the statute’s flexibility and the legitimacy of advance renunciations.

Under §122(17) as it now exists, corporations may: adopt renunciations applying to specific types or categories of opportunities; apply renunciations to specified persons, including sponsor-affiliated directors, observer seats, or officers; renounce opportunities that are not yet identified; and tailor waivers to match the corporation’s capital structure and investment ecosystem.  For companies with investors or directors who receive deal flow across multiple funds or operating companies, §122(17) remains an essential tool for protecting decision-makers and reducing post-transaction litigation risk.

On March 25, 2025, Delaware enacted SS 1 for SB 21, one of the most significant updates to the DGCL’s conflict-of-interest framework in decades. The bill substantially revises DGCL §144 and amends §220 (books and records). SS 1 for SB 21 applies to acts and transactions before, on, and after its enactment, subject to limited carve-outs for actions and §220 demands pending on or before February 17, 2025. 

The §144 revisions clarify when conflict transactions—including those involving corporate opportunities—are protected under the business judgment rule. A transaction involving an interested director, officer, or controlling stockholder may be insulated from challenge if: it is approved by a majority of fully informed, disinterested directors, or it is approved by a majority of fully informed, disinterested stockholders.  These amendments codify and clarify the cleansing effect of proper approval recognized in cases such as Corwin v. KKR Financial Holdings LLC, 125 A.3d 304 (Del. 2015), and apply expressly to controlling stockholder and control-group transactions. In addition, they confirm that properly adopted §122(17) renunciations may coexist with and reinforce §144 safe harbors, and are intended to provide greater predictability for transactions involving overlapping fiduciaries, portfolio company directors, and SPAC sponsors.

The amendments to §220 define “books and records” more specifically, clarify the scope and limits of stockholder inspection rights, and align the statute with recent Delaware Supreme Court decisions on inspection demands.

Many California-based entities choose Delaware incorporation for governance flexibility, even though California courts apply their own strict fiduciary duty doctrines (including the corporate opportunity rules under Cal. Corp. Code §310). Companies headquartered in California but incorporated in Delaware should evaluate whether their corporate documents are up to date. For example:  Do the charter and bylaws include a corporate opportunity renunciation under §122(17)?  Should renunciations be broadened to cover specific categories of opportunities (e.g., AI investments, healthcare deals, real estate opportunities)?  Should renunciations apply to sponsor-affiliated directors, observer seats, or fund managers?

In addition, companies should explore whether board and stockholder approval processes comply with revised §144:  Are conflict disclosures complete, written, and consistent with the statute?  Are disinterested directors or stockholders fully informed before votes?  Are approvals properly documented in board minutes?  Are special committees structured appropriately for transactions involving significant conflicts?  Companies should also evaluate whether overlapping fiduciary roles (e.g., directors who sit on multiple portfolio company boards) require tailored renunciations to avoid litigation risk, and whether procedures should be revisited for evaluating deals brought by investors, officers, or affiliates.

In light of SB 313 and SS 1 for SB 21, Delaware corporations, especially those with California operations, should, at a minimum: review charters and bylaws for conformity with updated §§122 and 144; add or clarify §122(17) renunciation provisions tailored to the company’s governance structure and investor profile; enhance conflict-review procedures, including disinterested director processes, special committees, and full-disclosure protocols; update board training to reflect the new statutory safe harbors and renunciation frameworks; document all conflict-related decisions carefully to preserve business judgment protections; and reassess governance arrangements for portfolio companies, joint ventures, and SPAC-related structures.

Delaware’s recent statutory updates (SB 313 (2024) and SS 1 for SB 21 (2025)) represent a modernized approach to corporate opportunity renunciations and conflict-of-interest safeguards. For California-headquartered companies incorporated in Delaware, these changes bring both flexibility and responsibility. Tailored renunciations under §122(17) and carefully executed approval processes under the revised §144 can significantly reduce litigation risk, align governance with modern investment realities, and protect corporate decision-makers. Because these amendments are substantial, early litigation will likely further define the contours of §122(17) renunciations and §144 safe harbors. Now is an ideal moment for boards to review governance documents, update conflict-management protocols, and ensure compliance with Delaware’s modernized fiduciary duty framework.

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