TheCorporateCounsel.net

Over on the Business Law Prof Blog, Prof Benjamin Edwards of the UNLV William S. Boyd School of Law has been tracking filings by companies seeking to reincorporate from Delaware since the passage of Delaware’s Senate Bill 21 in late March. Among the eight reincorporations he identifies over two blogs (seven to Nevada and one to Texas), he identifies the reasons companies commonly cite when seeking to move their state of incorporation. Below, I’ve paraphrased some of the proxy disclosures he cites in the blogs:

– More predictability and certainty. These disclosures point to Nevada and Texas using a “statute-focused approach to corporate law” and particularly that Nevada statutes “codify the fiduciary duties of directors and officers.”

– Reducing risk of “opportunistic litigation,” saying that there’s an “increasingly litigious environment in Delaware” and the company wants to avoid “unnecessary distraction to the company’s directors and management team,” sometimes citing specific past examples.

– Avoiding franchise taxes, comparing annual fees in Nevada to Delaware franchise taxes.

– Cheaper D&O insurance, claiming that reduction in litigation costs may reduce premiums.

– Local presence — citing a nexus to the new state.

Some of the disclosures specifically address the recent amendments to the DGCL and mostly say that it’s still appropriate to reincorporate because of continued uncertainty. They say, “the DGCL Amendments are new, untested and subject to judicial interpretation,” and “interpretative questions will remain as prior doctrines are reconciled with the new statutory mandates.”

Speaking of interpretive questions, on Tuesday, April 29, at 2 pm ET, we’re hosting the webcast “2025 DGCL Amendments: Implications & Unanswered Questions” on DealLawyers.com. Hunton’s Steven Haas, Gibson Dunn’s Julia Lapitskaya, and Morris Nichols’ Eric Klinger-Wilensky will give an overview of the amendments, discuss implications for transactions with directors & officers or controlling stockholders and for books & records demands, and consider unanswered interpretive questions.

Members of DealLawyers.com are able to attend this critical webcast at no charge. If you’re not yet a member, try a no-risk trial now. Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. The webcast cost for non-members is $595. You can sign up by credit card online. If you need assistance, send us an email at info@ccrcorp.com – or call us at 800.737.1271.

– Meredith Ervine