From Semafor, March 5:
MAGA offers corporations cover to flee Delaware
The Scoop
Late last month, a small group of influential corporate attorneys told Delaware legislators that blue-chip companies including Walmart were considering moving their legal homes out of the state, people familiar with the matter said.The message was a wake-up call for a state whose economy depends on corporate fees, and a sign that the revolt set off by Elon Musk — who moved Tesla from Delaware to Texas last year — could be spreading beyond MAGA-friendly tech CEOs.
Delaware has for decades had a monopoly on how America’s biggest companies are run. It is the legal home to two-thirds of US public companies, giving it outsize influence on everything from executive pay to takeovers.
That power has been under threat. Conservative ideology and a disdain for judges seen as activists has spurred Musk, Mark Zuckerberg, and others to move the companies they run to politically friendlier climes. Musk moved Tesla to Texas after the chief judge of Delaware’s special business court negated his $55 billion pay package for the second time, in a closely watched case that is now on appeal. Zuckerberg has considered moving Meta to Texas, The Wall Street Journal reported. His friend and fellow Meta board member, Drew Houston, reincorporated Dropbox in Nevada, where Bill Ackman, another MAGA convert, is planning to move his investment firm.
The seriousness of Arkansas-based Walmart’s threat — which was delivered to state legislators by a small group of corporate lawyers — remains unclear. But it was grave enough to spur the Delaware legislature to overhaul its corporate law, the people said. Changes proposed last month, which are now being fast-tracked through the legislature, would give controlling shareholders largely unchecked power and protection from shareholder lawsuits.
A Walmart spokesman declined to comment.
A quarter of Delaware’s state revenue comes from company fees, and millions flow indirectly from law firms and corporate services, which makes state officials sensitive to their complaints....
....MUCH MORE
There's been a flurry of discussion at Columbia University's CLS Blue Sky blog:
March 10 - A New Census of Corporations
Where do entities incorporate? The question is of perennial interest to academics who wish to research and teach the laws that govern many companies. It is of particular interest now, given a string of controversial court decisions and legislative responses…
March 7 - A Contractarian Path Forward for Delaware: A Modest Proposal for SB21
As I write this from the Tulane Corporate Law Institute’s annual conference in New Orleans, the energy is palpable. While Mardi Gras revelers have vacated the streets, they’ve been replaced by a different phalanx of uncharacteristically confrontational carousers: corporate law …
March 6 - Don’t Undermine Delaware’s Judiciary at the Behest of Elon Musk
On February 20, Delaware Supreme Court Chief Justice Collins Seitz met with members of the state’sGeneral Assembly and delivered some sobering words: “Along with our respect for your legislative judgments, I ask you to consider the importance of judicial independence.”…
March 6 - Delaware’s Manufactured Corporate Crisis
Delaware lawmakers recently rushed out proposed changes to the state’s time-tested corporate law, claiming that the risk that companies will leave Delaware demands an “urgen[t]” vote this month. We know now that the bill, S.B. 21, was written …
And then there's the dream—for some—of federal chartering. In 2018 Elizabeth Warren introduced a bill she called the Accountable Capitalism Act with the first bullet point being:
- Requires very large American corporations to obtain a federal charter as a "United States corporation," which obligates company directors to consider the interests of all corporate stakeholders: American corporations with more than $1 billion in annual revenue must obtain a federal charter from a newly formed Office of United States Corporations at the Department of Commerce. The new federal charter obligates company directors to consider the interests of all corporate stakeholders - including employees, customers, shareholders, and the communities in which the company operates. This approach is derived from the thriving benefit corporation model that 33 states and the District of Columbia have adopted and that companies like Patagonia, Danone North America, and Kickstarter have embraced with strong results....
In 2009 a couple of the D.C. policy shops wrote up similar proposals for the incoming Obama Administration.
And me? I'm still having problems with corporate personhood so I'm about 140 years behind in all this.
