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Despite recent criticisms of some of its decisions and the high-profile moves out of the state by a handful of public companies in response to them, Delaware’s Chancery Court has long been regarded as part of the “secret sauce” that makes the state the preferred jurisdiction of incorporation for most public companies. Texas is attempting to replicate that through the creation of its own business court, and now it appears that Nevada is laying the groundwork to do the same. This excerpt from a recent Business Law Prof Blog explains what Nevada’s up to:

The Nevada Legislature will consider a constitutional amendment this session to create an appointed business court. This is the language of the resolution as it was introduced by Assembly Members Joe Dalia and Shea Backus. Full disclosure, I strongly support Nevada creating this legal infrastructure and have helped on this issue.

The amendment would authorize the Legislature, at some future date, to create an appointed business court with “exclusive original jurisdiction to hear disputes involving shareholder rights, mergers and acquisitions, fiduciary duties, receiverships involving business entities and other commercial or business disputes in which equitable or declaratory relief is sought.”

It envisions creating a court comprised of at least three judges to be appointed by Nevada’s Governor off of a list of nominations to be provided by an existing Commission on Judicial Selection. In contrast to the short terms for the Texas business court, these appointed judges would serve six year terms.

The blog notes that this effort has plenty of hurdles to clear. The amendment will need to be approved by the Legislature twice and then face a public referendum. Since Nevada’s Legislature only meets once every two years, if the bill passes, it will need to pass again in 2027 before it can be presented to voters. Only after that happens could the Legislature enact legislation creating a business court.

– John Jenkins