Recent Developments for Directors — May 2025

Delaware Legislature Acts to Stop Corporate Exodus

In an effort to reverse corporate departures from Delaware, its state legislature amended the Delaware General Corporation Law to overturn multiple Chancery Court decisions. Notably, the amendments:

• limit controlling stockholder liability by excluding any stockholder or group that owns less than a third of a company’s voting power and by establishing that, other than in going-private or squeeze-out transactions, courts will not review a controlling stockholder transaction approved either by a committee of independent directors or by an informed and uncoerced vote of a majority of other stockholders;
• limit stockholder rights to inspect corporate books and records to core documents such as governing documents, minutes, board books, financial statements, and D&O questionnaires; and
• presume the independence of directors who satisfy stock exchange independence standards.

Companies have applauded these updates to Delaware law. Texas and Nevada in turn continue to take actions aimed at inviting public companies to reincorporate in those jurisdictions.

Companies Navigate Turbulence From Tariffs

New and upcoming tariffs are prompting companies to reevaluate their strategies for mitigating tariff risk exposure, focusing on public disclosure, compensation, and compliance with credit agreements and other financing arrangements. Companies are modeling scenarios to mitigate tariff impacts, such as:

• shifting production to tariff-exempt regions; 
• passing costs on to consumers; and
• adjusting customs valuations and supply chain planning.

Companies are disclosing the potential financial impacts, operational challenges, and economic and geopolitical effects of tariffs in their periodic reports and are engaging in detailed discussions with analysts during earnings calls.

Activism Continues to Rise

Activists are increasingly pushing companies for governance reforms, operational changes, strategic M&A, and adjustments to capital allocation. In the first quarter, US activist campaign activity rose 43% year-over-year, with 40 campaigns, and activists successfully gained 51 board seats despite economic uncertainty and market volatility. Activists are also using short seller attacks and ideologically driven proposals to exert pressure on companies. In response, boards are strengthening defenses by engaging proactively with institutional investors and other stockholders, simulating activist scenarios, establishing activism response protocols, and ensuring rapid response capabilities. Companies are reviewing governance standards and bylaws to address activist demands in advance.

SEC Signals End to Federal Climate Change Rules 

The SEC voted to end its legal defense of its rules requiring disclosure of climate-related risks and greenhouse gas emissions. In response, the federal appellate court overseeing litigation relating to the rules suspended the litigation until the SEC advises the court, by no later than July, whether it intends to review or reconsider the rules and whether it would enforce the rules if they are ultimately upheld by the court. Separately, climate-related regulations in California, the EU, and elsewhere continue to mandate disclosures, with several other US states proposing similar laws. Companies are monitoring these developments and assessing their specific compliance obligations.

Directors Prepare for EDGAR Next

Directors are working with companies to complete their required enrollment in the SEC’s new filer-credential system, known as EDGAR Next. Everyone who makes SEC filings — directors and officers in addition to every SEC-registered company and its major stockholders — can benefit from the voluntary transition period before enrollment becomes mandatory on September 15, 2025. The SEC adopted the new system last year to improve filer access and “account management capabilities” for the SEC’s online Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. Companies are working with directors and other filing persons to prepare for the deadline. See our EDGAR Next FAQs.