A couple of recent posts on the Business Law Prof Blog combine to make the point that in the race to dethrone Delaware, Nevada just seems to be a lot more serious and thoughtful than Texas.  Here’s an excerpt from Prof. Ben Edwards’ post discussing a new Nevada Comission created to study the state’s business courts:

Yesterday, the Nevada Supreme Court officially created a Commission to Study the Adjudication of Business Law Cases. I previously covered the Supreme Court’s proposal here and submitted a letter in support of the proposal. The order creating the Commission contemplates a continuing public process. It provides that the Commission “shall conduct all hearings in public and post all meeting minutes and documents considered by the Commission on the Supreme Court’s website.”

In a related LinkedIn post, Prof. Edwards points out that five of the attorneys on the 24-member Commission have collectively appeared in 242 Nevada Business Court Cases in the past decade.

Meanwhile, Prof. Ann Lipton provided her take on recent developments in The Lone Star State. She’s not impressed:

I keep explaining in various spaces so I may as well articulate it here too: It’s tough to make predictions, especially about the future, but I would be surprised if Texas wins the current chartering race, or at least, wins the race it’s currently running. The issue for Texas is that it keeps demonstrating that it is not interested in crafting a well-designed – even manager-friendly – corporate law; instead, it is interested in using corporate governance as another cudgel in the culture war.

Let’s look, for example, at two recent amendments to its corporate code: allowing corporations to limit shareholder proposals by those who hold either less than $1 million worth of stock or 3% of voting shares; and the proxy advisor law that puts a variety of restrictions on proxy advisor advice.

These laws explicitly take aim at liberal-coded measures; shareholder proposals, for example, have historically been oriented toward liberal causes (despite a recent upsurge in anti-ESG proposals), and the proxy advisor law is targeted at “ESG” advice.

The laws are also a model of poor drafting. The shareholder proposal law, for example, does not apply to corporations chartered in Texas, but does apply to corporations headquartered in Texas or listed on the (currently nonexistent) Texas Stock Exchange. The proxy advisor law, by contrast, applies to corporations chartered in Texas or headquartered in Texas, but not companies listed on the TSE. I don’t know why the inconsistency, and I’m guessing neither does the Texas legislature.

She also points out that while the Texas legislature scrambled to enact anti-woke corporate legislation, it still hasn’t given its corporations the ability to enter into the kind of shareholder agreements that Delaware amended its statute to permit following the Chancery Court’s Moelis decision. Despite corporations’ obvious desire for the flexibility to enter agreements of that kind, the legislature hasn’t tweaked its statute, and those agreements remain “somewhere between very difficult and impossible to adopt in Texas.”

Texas’ AG Ken Paxton’s announcement that he’s investigating ISS & Glass Lewis for “issuing voting recommendations that advance radical political agendas rather than sound financial principles” seems to be additional confirmation that the state’s banking on the culture war to turn it into a mecca for Delaware’s corporate diaspora.

– John Jenkins