After Elon Musk’s Delaware exit, state lawmakers weigh bill to overhaul corporate law
Delaware lawmakers are considering a bill that aims to make the state attractive to investors and executives.
Tesla CEO Elon Musk turned Delaware's corporate law into a hot-button topic last year after a judge there ruled that his $56 billion pay package from 2018 was illegally granted and should be rescinded.
In social media posts, Musk smeared the judge and became an outspoken critic of Delaware's judiciary, moving the site of incorporation for Tesla and his other companies out of the state while encouraging others to follow suit. Dropbox moved its site of incorporation to Nevada, and Bill Ackman said his Pershing Square Capital Management would exit Delaware. Meta and Walmart are reportedly considering leaving.
After a flurry of such announcements, Delaware's Senate Majority Leader Bryan Townsend, a corporate attorney by trade and former clerk for Delaware's Court of Chancery, began looking into the matter with fellow elected leaders. He then moved to sponsor a bill, known as SB 21, aimed at making Delaware a more attractive state for businesses.
On Thursday, the state Senate voted to pass an amended version of SB 21. If it passes Delaware's House of Representatives, in a vote expected next week, and gets signed by the governor, the bill would change the state's corporate law. Notably, it would alter how companies can use independent directors and other officials to ensure deals they've made will pass muster in court, and limit the records that shareholders can obtain from companies when investigating possible wrongdoing.