TheCorporateCounsel.net

If you’re working with a company that is considering migrating from Delaware to Texas or Nevada, a recent Woodruff Sawyer blog highlights a potential advantage that those states’ corporate statutes provide over the DGCL that I haven’t seen addressed before – the potential for less expensive Side A D&O coverage:

As we explained in our article last year, a company’s state of incorporation has not historically been a material factor in D&O insurance rates or coverage terms. The wildcard here is the extent to which companies, lawyers, and insurers talk in out-loud voices about the framework for indemnification of derivative settlements and judgments. This is, of course, prohibited in Delaware, making Side A D&O insurance particularly important for directors and officers.

By contrast, indemnification of derivative suit settlements and judgments appears to be permitted in some forms in Nevada and Texas. Where companies are permitted/have an indemnification obligation for derivative settlements, and if directors are also subject to significantly more generous standards of liability, such as in Nevada, Side A D&O insurance really should be easier for insurers to write. It should also cost less than it does for a Delaware corporation. We’ll be watching this space closely.

Based on what we’ve seen so far, Delaware probably will be watching this space closely too. Stay tuned for the 2026 DGCL amendments.

– John Jenkins