Elon Musk seems to be everywhere this month, between the dismissal of federal employees for President Donald Trump, and news in his companies TeslaIN SpacexAND X. And his image is on all political leaders in Delaware, as part of a high rate, but an intensively local lobbying campaign over the proposed state legislation.
Senate Bill 21 It has been designed to make miniature shareholders more hard to sue controllers such as Musk or Meta Boss Mark Zuckerberg for alleged conflicts of interest.
This should lend a hand, for example, Musk to collect a salary package for over $ 50 billion twice blocked by the highest judge of the office, Chancellor Kathaleen McCormick. Or can lend a hand Zuckerberg sink A test to pay for the shareholders for billions that were fined for illegal access to customer information.
. Bill has been approved by the Senate of State unanimously last week, and the Chamber agreed Proposed amendmentS, which would weaken the changes. Governor Matt Meyer immediately signed it.
What is it about?
The fight is on changes in corporate law, Supported by the new governor Matt Meyer, leaders of the State Senate and local and national law and investment companies representing vast companies. They say that the recipes would be Keep the lucrative status delavare as “Corporate capital of America“And $ 2 billion in annual corporate fees, One third of the state budget.
Critics, including an activist investorsIN Retirement plansIN Scholars for corporate orderAnd some of the friends from Meyer’s democrats claim that the state and the business cordial for the court of chancellor risk the loss of legal integrity towards the corporate coup.
Why corporations love Delaware
In 1899, Delaware adopted business -friendly incorporation law, which he maintained because other countries narrow corporations. Since then, Delaware is a reliable place to be turned on at low fees and quickly resolving business disputes and with minimal confusion.
The state claims that more than half of the companies listed on the stock exchange and over 60% of the 500 fortune are included in Delaware. Wilmington is home to Big New York, Washington and Philadelphia, Law Firm and Domestic companies specializing in law firm.
The office of the office itself is an attraction led by the governor of corporate lawyers. These chancellor and vice -channels are specialized judges working without a jury who can quickly resolve the fight between shareholders and managers.
State corporate rules are annually adapted by regulations formed by corporate lawyers and investors, and these changes are rarely controversial. This year is different.
Does business really run away from Delaware?
Even with Tesla, he copes well with a musk threat to throw deelaware for Texas, and Finish Also threatening to leaveMany companies are still moving legal operations to Delaware.
Among the American start-ups last year, 89% were registered in accordance with the law of Delaware, the law of law Columbia Dorothy Lund said on February 24 at a conference in New York sponsored by the corporate order of the University of Delaware.
Lund said that procedural restrictions in Senate 21 are mainly captivating for a miniature group of companies whose bosses also control shareholders such as Musk and Zuckerberg.
“I don’t think this is a great threat,” said Lund. “And yet we have a great reaction.”
Governor Meyer claims that this year’s collection of corporate fees is higher than the last. But Meyer is worried about complaints of powerful presidents, such as Musk, and the perception of the more mainstream of companies that Delaware has become too cordial for lawyers and activists of plaintiffs, they can leave business and harm state revenues while departing from business.
Who is not satisfied with the Chancery Court?
Phil Shawe, a co -founder of a company worth a billion dollars Transterfect, has been so upset the law firm’s ruling for years Dispute about the value of the company that he financed Public attack campaign about the law firm and “establishment” Delaware as “corrupt”.
Last year Shawe spent $ 1.25 million on Pac, who ran a campaign against Lieutenant Delaware Bethany Hall-Long in basic democratic. It helped turn on Meyer to take over the highest work.
Until then, the Shawe campaign was not so lonely.
In 2022, the most crucial judge of the deelaware law firm, Kathaleen McCormick, rejected attempts to withdraw from the contract for the purchase of the Twitter social platform, currently known as X. In 2024, it twice ruled that the plan of the board of Tesla to grant him over $ 50 billion in action, because the company failed to be in the best interests. McCormick would not move even when most shareholders, including the Vanguard group, approved the payment.
Mudzkie in full -time deelaware on X then led his laws of his companies out of their state. He directed Tesla to Texas, who recently established business courts in his main cities.
McCormick also ruled against the attempt to transfer action to his children, McCormick from 2017, while controlling their voting. The finish will now be followed Another complaint for the office, Through a group of pension funds, it requires compensation for illegal access to customer data on Facebook.
Old commandment, new vibrations
In his roots, “corporate law is simple:” Although he does not steal, “said Sean Griffith, a professor of law at Fordham University. He compared the past matters of Delaware to the “arts of morality”, in which the judges reviewed whether the boards did enough to protect the interests of shareholders.
But a ruling against billions of musk even after shareholders supported the payment may be “logically convincing, but politically impossible,” added Griffith.
Professor of the Law of the University of New York, Edward Rock, many years of scholar in the deelaware court, suggested that the Senate Act was a reaction to the recent “atmosphere” that the Delaware reputation suffered for “sophisticated courts with a business tower”. The founders of rich companies believe that “it is outrageous to say that they cannot take a lot of money” without satisfying additional judicial conditions.
Rock was worried about a “hasty” attempt to fix this perception, limiting the rights of judges through legal boundaries. He added that the more law is specified in books, leaving no discretion of veterans of the office judges, the easier for competing countries to copy, removing the competitive advantage of Delaware.
Who is this for this?
The act was developed in the offices of the leading corporate office Delaware, Richards, Layton & Finger, one of several that represented the musk in the Delaware dispute.
Governor Meyer, after consulting corporate lawyers, told residents that the law must be adopted to preserve the ability of the state to Continue without a tax on retail sales. He warned against the “disinformation” of opponents.
Meyer’s position meant a departure from the usual restraint of state officials regarding corporate law.
“The governor met with very intensive pressure,” said Lawrence Cunningham, head of the Corporate Lady Center at the Delaware at the event in New York. “He did something that most governors did not: practiced leadership.”
The bill was Supported Through an influential legal trio: William Chandler, a former judge of the Chancellery Court, who is currently working in a leading law firm in the Silicon Valley, Wilson Sonsini; Leo E. Strine, former main judge Delaware, who once toured at Ivy League Law Schools, conducting a campaign to “straightforward and sustainable business practices”; and Lawrence Hamermesh, a retired professor at the University of Videner, the only lawyer of Delaware.
Who is against?
Bill critics are Charles Elson, a corporate advisor based in Delaware, and other corporate scholars.
“This is not good for Delaware or for capital markets,” Elson said before he testified against the act at the Dover. Some scientists of law also performed, who specialize in management issues.
Elson predicted that the bill would convince some shareholders to avoid Delaware because they would lose power to protest against selfish CEO decisions. Activist Public retirement funds and investors of hedge funds, plaintiff’s lawyers groups and consumer organizations also called on Delaware representatives to rely on the act.
Editor’s attention: This story has been updated.
