What Europe can learn from the law and economics of Delaware SB 21

Senate Bill 21 (SB 21) recast Delaware’s law of controlling shareholder transactions, making it easier for controlling shareholders to obtain approval of related-party transactions. The reform has been controversial. This article argues that the central issue is not conflict of interest as such, but the opportunistic use of control discretion. SB 21 established procedures through which controllers may cleanse conflicts of interest, while leaving Delaware courts to police opportunistic compliance with those procedures. The broader lesson is that a European corporate law model, such as the EU Inc., requires a specialized EU court able to apply statutory rules uniformly and predictably while constraining their opportunistic use.