One of the more interesting recent developments in the U.S. corporate arena has been the recent emergence of a DExit movement – that is, the rise of the argument that companies would be better served to move their state of incorporation from Delaware to another state, usually Nevada or Texas. In the following
Litigation parties have long sought to maneuver their cases into forums they believe to be more favorable to their positions or interests. In the following guest post, Richard Zelichov, Partner in the Corporate and Securities Litigation practice at DLA Piper (US), and Melanie Walker, Chair of the Corporate and Securities Litigation practice at DLA Piper (US), take a look at a recent variant of these efforts, involving shareholders who are seeking to avoid Delaware as a litigation forum. I would like to thank Richard and Melanie for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Richard and Melanie’s article.Continue Reading Guest Post: Legal Shopping Spree Continues in Internal Affairs Disputes: Key Case Developments
In recent months, a debate has raged about whether Delaware companies should up stakes and reincorporate elsewhere, particularly Nevada or Texas. While this debate has sparked a great deal of discussion, and while a few high-profile companies have made the move, by and large the number of companies actually moving remained small. But now in a potentially significant development for the whole DExit topic, Silicon Valley VC firm Andreesen Horowitz has announced that it is leaving Delaware for Nevada, and, perhaps event more significantly, encouraging its portfolio companies to incorporate in Nevada as well. As discussed below, this development could represent an inflection point in the DExit debate, with potential significance for the corporate litigation going forward.Continue Reading Did the DExit Debate Just Hit an Inflection Point?
In late March (as discussed here), and as part of its effort to try to stem the flow of corporate departures from the state, the Delaware legislature enacted S.B. 21, which made a number of significant revisions to the state’s corporations code. As I noted in a prior post, a number of parties in lawsuits pending in the state’s courts have raised constitutionality challenges to S.B. 21. Late last week, a Vice Chancellor certified two questions to the state’s Supreme Court. Earlier this week, the Supreme Court agreed to take up the questions, apparently on a fast-track basis. The certification of the questions and the Supreme Court’s response ensure that the constitutionality questions will be quickly reviewed.Continue Reading S.B. 21 Constitutionality Questions Certified to Del. Supreme Court
In order to try to stem the supposed tide of Delaware corporations reincorporating in other states (particularly Texas and Nevada), Delaware recently enacted a set of revisions to its corporate law. Whether or not the legislative changes are sufficient to reduce the number of so-called “DExits” remains to be seen. But the other states are not just standing by idly waiting to see what happens. They have been at work in their own corporate law laboratories. As discussed below, the legislatures of both Texas and Nevada have in recent days both passed significant revisions to their respective corporate laws. The changes not only represent significant shifts in the corporate law arena, but also could entail significant changes in the corporate litigation world, as well.Continue Reading Delaware Amended Its Corporate Laws, So Texas and Nevada Did, Too
One of the current hot topics is corporate and securities law is whether Delaware companies should reincorporate in other states, particularly in the states of Nevada or Texas. In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, examines the state of incorporation of the new Texas Stock Exchange, which, surprisingly, turns out to be Delaware. I would like to thank Sarah for allowing me to publish her article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah’s article.Continue Reading Guest Post: The TXSE is Domiciled in Delaware
On October 26, 2023, the Economic Crime and Corporate Transparency Act 2023 (the Act) became law in the UK. The Act is part of the UK government’s effort to tackle economic crime. In the following guest post, Francis Kean, Partner in the Financial Lines Team at McGill and Partners, takes a look at the SFO’s new investigative powers under the Act and considers their implications for corporate executives. A version of this article previously was published in the Governance and Compliance Magazine. I would like to thank Francis for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Francis’s article.Continue Reading Guest Post: The Personal Liability Implications for Directors of the SFO’s New Investigatory Powers
As readers undoubtedly have noted, one of the hot topics these days is the question whether corporations should change their state of incorporation from Delaware to that of another state, usually either Nevada or Texas. The dialog on this topic was already underway when Elon Musk supercharged the conversation by vowing, in reaction to the Delaware court’s disallowance of his $56 billion pay package, to have Tesla change its state of incorporation from Delaware to Texas. I suspect that the state of incorporation debate is going to be with us for some time to come, making it important for those of us who might have to participate in (or at least listen to) the conversation to get a handle on the key differences between the states.Continue Reading Delaware or Another State: What’s the Difference?
When insurer Lemonade recently completed its IPO, it did so as a “public benefit corporation” – that is, a corporation chartered to allow it to have a public benefit purpose, in addition to the traditional profit maximization model. Lemonade’s IPO has raised the question whether other companies will follow this model, including in particular whether other IPO companies will complete their listings as a public benefit corporations. The possibility that other companies may adopt the public benefit corporation model raises a number of questions, including in particular questions concerning the duties and potential liabilities of public benefit corporation directors, as discussed below.
Continue Reading Will More Companies Adopt the Benefit Corporation Model?