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Business Insider
09-07-2025
- Business
- Business Insider
Andreessen Horowitz is the latest company to follow Elon Musk out of Delaware
Andreessen Horowitz announced Wednesday it will move its primary business — AH Capital Management — to Nevada. Although Delaware has historically been a business-friendly state, a series of court rulings have led some executives to question whether that's still true. "In particular, Delaware courts can at times appear biased against technology startup founders and their boards," the firm said in a blog posted to its website. The firm added that the "legal uncertainty" has caused concern among "entrepreneurs and their professional investors who often sit on their boards." "As a result, many of the companies we fund and the entrepreneurs that we talk to are taking a second look at whether they should incorporate in other jurisdictions, prompted by the departure from Delaware of significant technology companies like Dropbox, Tripadvisor and Tesla," the firm wrote. Andreessen Horowitz said the firm could have moved to Nevada "quietly" but felt it was crucial to make the decision public. "For founders considering a similar move, there is often a reluctance to leave Delaware, based in part on concerns for how investors will react," the company said. "As the largest VC firm in the country, we hope that our decision signals to our portfolio companies and prospective portfolio companies that such concerns may be overblown." Andreessen Horowitz said it will continue to fund companies incorporated in Delaware, but considers Nevada a "viable alternative and may make sense for many founders." Musk launched this trend of companies leaving Delaware after a Delaware courtvoided the Tesla CEO's $55 billion pay package in response to a 2018 lawsuit filed by a shareholder who thought the amount was excessive. As a result, Musk moved SpaceX to Texas. Other companies, including Roblox and Bill Ackman's Pershing Square Capital Management, followed suit. Delaware Gov. Matt Meyer told Business Insider in February that the state is working to address concerns. In March, the state amended the Delaware General Corporation Law.
Business Insider
09-07-2025
- Business
- Business Insider
Andreessen Horowitz is the latest company to follow Elon Musk out of Delaware
A top venture capitalist firm is following in Elon Musk's footsteps and ditching Delaware. Andreessen Horowitz announced Wednesday it will move its primary business — AH Capital Management — to Nevada. Although Delaware has historically been a business-friendly state, a series of court rulings have led some executives to question whether that's still true. "In particular, Delaware courts can at times appear biased against technology startup founders and their boards," the firm said in a blog posted to its website. The firm added that the "legal uncertainty" has caused concern among "entrepreneurs and their professional investors who often sit on their boards." "As a result, many of the companies we fund and the entrepreneurs that we talk to are taking a second look at whether they should incorporate in other jurisdictions, prompted by the departure from Delaware of significant technology companies like Dropbox, Tripadvisor and Tesla," the firm wrote. Andreessen Horowitz said the firm could have moved to Nevada "quietly" but felt it was crucial to make the decision public. "For founders considering a similar move, there is often a reluctance to leave Delaware, based in part on concerns for how investors will react," the company said. "As the largest VC firm in the country, we hope that our decision signals to our portfolio companies and prospective portfolio companies that such concerns may be overblown." Andreessen Horowitz said it will continue to fund companies incorporated in Delaware, but considers Nevada a "viable alternative and may make sense for many founders." Representatives for Andreessen Horowitz did not respond to a request for comment from Business Insider. Musk launched this trend of companies leaving Delaware after a Delaware court voided the Tesla CEO's $55 billion pay package in response to a 2018 lawsuit filed by a shareholder who thought the amount was excessive. As a result, Musk moved SpaceX to Texas. Other companies, including Roblox and Bill Ackman's Pershing Square Capital Management, followed suit. Delaware Gov. Matt Meyer told Business Insider in February that the state is working to address concerns. In March, the state amended the Delaware General Corporation Law. "It's really important we get it right for Elon Musk or whoever the litigants are in Delaware courts," he said. "We're cognizant that there may be some things that need to change. We're going to work on them."
Yahoo
25-06-2025
- Politics
- Yahoo
Democrat claims retaliation by House speaker for not backing contentious corporate law bill
Delaware state Rep. Sherae'a 'Rae' Moore has lobbed a cease-and-desist letter to fellow Democrat and House Speaker Melissa Minor-Brown. The letter, sent June 24, claims "blatant retaliation" against the Middletown lawmaker for not supporting the hotly contested corporate law legislation, Senate Bill 21, earlier this session. This only continues a trend of tension between these two colleagues, after an investigation by Delaware Online/The News Journal found Moore among more than 450 educators working on expired or missing teaching licenses in March. In the fallout of that reporting – as well as denial in committee discussion that the issue involved her – Moore was removed as vice-chair of the House Education Committee. When Minor-Brown announced that decision on May 14, some of her comments light up this week's letter from Moore's outside attorney. Wilmington attorney Thomas S. Neuberger called out language the speaker used in an interview with Delaware Public Media, having said: 'I don't know how we can sit here and turn a blind eye to a situation where we clearly know that somebody was in a classroom teaching who should not have been in the classroom holding children's lives in their hands.' He argues that calling Moore a danger to children verges on defamation. More centrally, though, the attorney argues Minor-Brown's decision to strip Moore from her committee was retaliation for opposing SB 21 – which stood to make changes to the Delaware General Corporation Law – and effectively "cancel" his client in the court of public opinion. "You were angered by her public opposition to and refusal to fall into line on this significant legislation with both local and national implications," Neuberger writes, arguing this threatened his client's freedom of speech. "Stated another way, your inability to get fellow members of your own party into line made you look bad in front of the governor who was pushing hard to get this Bill enacted." Moore was one of seven votes against the bill. Regardless, Gov. Matt Meyer signed it into law back in March. The letter seeks an apology, while also threatening to sue the top House Democrat for financial damages if she does not stop "defaming" Moore in the next 30 days. House Speaker Brown wasn't entertaining Wednesday morning. "We're in the final days of session trying to pass laws that actually help people – some of us are just more focused on doing the work than making headlines," she told Delaware Online/The News Journal in a written statement June 25. "Disagreements happen, but spinning conspiracies for attention doesn't help Delawareans. It's disappointing, but not surprising. The timing speaks for itself, and frankly, so does the record." Full investigation, timeline: Hundreds of Delaware teachers found to be working on expired licenses in public schools Senate Bill 21 explained: Controversial corporate law changes passed by House, signed by Delaware governor Moore began her teaching career in 2018. As of this 2024-25 school year, she is both a lawmaker and a special education teacher at Louis L. Redding Middle School. As reporting continued by Delaware Online, Appoquinimink School District uploaded a 'Welcome Letter' from Wilmington University's Special Education Teacher program, dated April 2, 2025, which showed Moore would officially begin her "Alternative Route to Certification" program. When news of her removal from the House Education Committee erupted, Moore initially told Delaware Public Media on May 14 that she believed the move was a "politically motivated" attack from both Speaker Minor-Brown and House Education Chair Rep. Kim Williams. As of April 30, More had accepted an emergency certification in English and special education, as well as an initial license after the lapse. Citing this, Moore told the outlet, "The real reason is politically driven due to, one, me not being able to be controlled and having a mind of my own, and that Rep. Williams has not been deemed the champion of education she has traditionally been." She also argued, as reported by the outlet May 15, her removal was likely based on recent tension between her and Williams over free school meals legislation. In previous reporting, House leadership has credited Moore's removal to previous lack of proper licensing while teaching, as well as floating an amendment to a House bill related to such educator licensing that could have directly benefited her. During an April 9 House Education Committee hearing discussing House Bill 97, as previously reported by Delaware Online, Moore shared concerns about teachers caught up in delays on the part of universities offering ARTC programs. During that discussion, all of her questions surrounded this concern. But when prompted, she directly denied the issue being about her. "If she believed there were flaws or inequities, she could have used her position to advocate for changes," Minor-Brown said in May. "Instead, she remained silent until she proposed an amendment to an education bill that would have personally benefited her own certification status. That action undermined the integrity of our committee process." Full investigation, timeline: Hundreds of Delaware teachers found to be working on expired licenses in public schools Send tips or story ideas to Esteban Parra at (302) 324-2299 or eparra@ Contact Kelly Powers at kepowers@ or (231) 622-2191. This article originally appeared on Delaware News Journal: Delaware Democrat claims retaliation in removal from House committee
Business Journals
06-06-2025
- Business
- Business Journals
Delaware's 2025 DGCL amendment
In March 2025, Delaware enacted significant amendments to the Delaware General Corporation Law (DGCL). These amendments, enacted through Senate Bill 21 (SB 21) and signed into law by Gov. Matt Meyer on March 25, 2025, substantively modify the safe harbor provisions for interested transactions and refine the scope of stockholder inspection rights. We analyze these critical changes and their practical implications for Delaware corporations, their boards and stockholders. Background and context The amendments were passed by the Delaware legislature in response to a concerning trend of corporations redomesticating to other states. The law took effect immediately upon the governor's signature and represents Delaware's proactive effort to maintain its position as the premier state for corporate domicile by providing greater statutory clarity in areas previously defined primarily through case law. Section 144: Comprehensive safe harbor framework Defining the 'controlling stockholder' The amendments provide a statutory definition of a 'controlling stockholder' as one who: Owns or controls a majority of voting stock entitled to vote in director elections Can appoint directors with majority voting power, or Has equivalent control by holding at least 33.33% of the corporation's voting stock and managerial authority over the corporation Three distinct safe harbor paths The amendments establish differentiated approval requirements for interested transactions based on the specific conflict scenario: 1. Majority interested board safe harbor For transactions involving a majority interested board, the amendments provide a safe harbor from both equitable relief and damages liability through either: Approval by an independent committee comprising at least two disinterested directors, or Approval or ratification by a majority of the votes cast by disinterested stockholders Notably, the director safe harbor no longer requires conditioning approval before the start of substantive economic negotiations, though the board must determine all committee members are disinterested. For stockholder approval, the 'votes cast' standard replaces the previous 'outstanding' shares standard. 2. Conflicted controller/non-go-private transactions For transactions where a controlling stockholder has a conflict but is not taking the company private: Safe harbor is available through either: Approval by an independent committee comprising at least two disinterested directors, or Approval or ratification by a majority of the votes cast by disinterested stockholders This effectively overrules prior case law requiring both protections for such transactions. 3. Conflicted controller / go-private safe harbor For transactions where a controlling stockholder is taking the company private: Safe harbor requires both: This codifies the dual-protection framework from Kahn v. M&F Worldwide Corp. (MFW) while eliminating the 'ab initio' requirement that these protections be implemented before the start of substantive economic negotiations. Enhanced protection for public company directors The amendments create a strong presumption that directors of public companies are disinterested and independent if they meet stock exchange independence definitions. This presumption: Does not apply if the director is a party to the transaction Can only be rebutted by 'substantial and particularized facts' The amendments also limit controller liability to breaches of loyalty or improper benefits, shielding controlling stockholders from damages for breaches of the duty of care in their capacity as controllers. Section 220: Refining stockholder inspection rights Statutory definition of 'books and records' The amendments provide a statutory definition of 'books and records' to establish clearer boundaries for stockholder inspection rights, including: Enhanced requirements for inspection SB 21 also institutes more structured requirements for books and records inspections: Demands must be conducted in good faith Proper purpose must be described with reasonable particularity Requested records must be specifically related to the stockholder's proper purpose Additionally, the amendments codify that corporations can impose reasonable confidentiality restrictions, limiting the use and distribution of inspected records and redacting irrelevant information. Limited expansion provision Unlike the original bill, the enacted amendments permit the inspection of materials beyond those covered by the 'books and records' definition if a stockholder: Makes a showing of a compelling need for inspection to further a proper purpose, and Demonstrates by clear and convincing evidence that such specific records are necessary and essential to further such purpose This balanced approach is designed to preserve meaningful inspection rights while providing companies with greater certainty about the scope of potential demands. Practical implications For corporate governance: Strategic flexibility in transaction planning: The amendments provide multiple pathways to cleanse conflicted transactions based on the nature of the conflict, enhancing flexibility in transaction structuring. Greater certainty for boards: The presumption of independence for public company directors who meet exchange requirements reduces litigation risk in board decision-making. Protection for controllers: Limiting controller liability to breaches of loyalty or improper benefits shields controlling stockholders from damages for breaches of the duty of care. Streamlined approval processes: Removal of the 'ab initio' requirement and other timing constraints allows more practical implementation of protective measures. For transaction planning: Clearer standards: The 33.33% threshold for controlling stockholder status provides a bright-line rule. Tailored approval paths: Different cleansing options based on transaction type allow more efficient governance approaches. Special committee requirements: Committees must include at least two directors determined to be disinterested and fulfill their duty of care. Modified stockholder approval standard: The shift to a 'votes cast' standard from 'outstanding shares' may make stockholder approval more attainable. For stockholder rights: More defined inspection scope: The statutory definition of 'books and records' provides both corporations and stockholders with greater clarity. Balanced protection: While defining limits to inspection rights, the amendments preserve access to additional records when stockholders can demonstrate compelling need. expand To learn more about King & Spalding's global M&A practice, please visit With nearly 140 years of service, King & Spalding is an international law firm that represents a broad array of clients, including half of the Fortune Global 100, with 1,300 lawyers in 24 offices in the United States, Europe, the Middle East and Asia. Rob Leclerc works with publicly traded and private companies as well as private equity firms to execute mergers and acquisitions, strategic investments, joint ventures and other complex transactions. Leclerc is a partner in our Mergers and Acquisitions and Corporate Governance practices. Zack Davis specializes in representing issuers and underwriters in a variety of capital markets activities in the U.S. and abroad. He also advises a number of public companies in connection with governance issues, SEC reporting and disclosure requirements and other corporate and securities matters.
Yahoo
21-02-2025
- Business
- Yahoo
Elon Musk had his $100 billion Tesla pay package denied by Delaware courts twice. Now, one of the EV maker's law firms wants to change state law
More than two-thirds of the Fortune 500 is incorporated in Delaware, but Tesla CEO Elon Musk's criticism of the state's courts has coincided with other major companies leaving the state. A law firm that represented Tesla during Elon Musk's pay challenge has helped draft a bill that proponents say will prevent such an exodus, but critics allege the bill's expedited development lacks transparency. Tesla CEO Elon Musk believes the legal system in Delaware has prevented him from getting a fair payday, despite the state's reputation as the premier locale for incorporation due to its specialized business court, expert judges, and well-honed case law. In fact, about half of Russell 3000 companies have exclusive-forum bylaw provisions in place that explicitly require legal disputes involving the company to be litigated in Delaware rather than in a less-sophisticated and more hostile legal venue in another state. But, the court's opinion on Musk's moonshot pay package and his subsequent complaints about the state's jurisprudence have caught the attention of some lawmakers and legal experts. Musk brutally criticized a state judge who twice struck down his compensation package, now valued at nearly $100 billion. The electric vehicle maker has since reincorporated in Texas, but Musk's complaints directed a spotlight squarely at the Court of Chancery as well as the state's primary corporate statute, the Delaware General Corporation Law. Now, a law firm that represents both Musk and Tesla has helped draft a proposed amendment to state law as Delaware lawmakers race to convince other major companies to stay put. Roughly two-thirds of the Fortune 500 is incorporated in Delaware—the mecca of U.S. corporate law for more than a century—which generates billions in revenue for the state and has created a thriving legal industry that helps sustain the local economy. Tesla's departure, however, has led to fears about Musk sparking a wider corporate exodus. Bill Ackman recently said his activist hedge fund, Pershing Square, would reincorporate in either Texas or Nevada, two states trying to entice companies to relocate. Mark Zuckerberg's Meta is reportedly mulling a move to the Lone Star State, while companies like Dropbox and TripAdvisor are heading to Nevada. This month, Delaware Gov. Matt Meyer told Fortune in an interview that changes aimed at ensuring the state remains corporate America's go-to legal forum could be expected in the coming weeks and months. The former proved to be correct on Monday, when Delaware legislators introduced a bipartisan bill that would make several statutes more friendly to executives who are also controlling shareholders—like Musk, Zuckerberg, and Ackman. 'My sense and the governor's sense was that Delaware needed to do something very promptly,' said Lawrence Hamermesh, professor emeritus at Delaware Law School and one of the primary authors of the bill. Hamermesh developed the proposed changes with two of the state's most prominent former jurists: William Chandler, who formerly headed the state's Court of Chancery, the nation's leading court for handling corporate disputes. And Leo Strine, who also served as chancellor in the court before his tenure as chief justice in the Delaware Supreme Court. State Sen. Bryan Townsend, the bill's primary sponsor, said John Mark Zeberkiewicz, a director at law firm Richard, Layton & Finger, also took part as the group's 'scrivener' tasked with drafting the group's work. The firm, which served as counsel for Tesla during the pay package dispute, said its involvement was not on behalf of any specific client. 'As many have recognized, statutory changes are necessary to restore the core principles that have been the hallmark of Delaware for over a century and ensure that Delaware remains the preeminent jurisdiction for incorporation,' Lisa Schmidt, the firm's president, said in a statement. Tesla did not respond to a request for comment. Townsend, a Democrat and the state senate's majority leader, said the concerns addressed in the bill were not sparked by Musk's departure, even though he understands why people would connect the dots. 'We're not here to court him back,' Townsend said of the world's richest man. He and Hamermesh emphasized the new bill, titled Senate Bill 21, is not retroactive, meaning it can't overturn the decisions rescinding Musk's pay package. It's hard to establish that awarding executive compensation worth roughly $95 billion—the current value of the proposed package, based on Tesla's current share price around the $355 mark—is economically fair, Hamermesh said. 'I do resent efforts to suggest that this is all a sop to Republicans and Elon Musk,' Hamermesh said of the bill, 'because this ought to be supported, I think, by Democrats like me and Republicans alike.' Critics, however, say the process has lacked transparency. Typically, changes to Delaware corporate statutes are drafted, debated, and reviewed by the state bar's corporation law council before they are presented to legislators. Senate Bill 21, meanwhile, was authored by a small group of individuals largely unified in their viewpoints, said Charles Elson, founding director of the University of Delaware's Weinberg Center for Corporate Governance. He thinks the bill could weaken Delaware's hold on U.S. corporate law if institutional shareholders and other investors decide the state's safeguards for minority stockholders—like those who sued Musk—are now insufficient. More importantly, he thinks the bill greatly undermines the credibility of the state's courts. 'You're basically saying our courts are no good,' he said of the bill. 'That's why we're overruling them.' Backers of the bill, however, insist time was of the essence to make changes. Hamermesh noted that companies are currently writing their proxy statements to prepare for shareholder meetings in April, May, and June when potential stockholder votes to reincorporate could take place. Townsend said interviews with frustrated business leaders indicated more companies would leave if Delaware didn't act fast. 'An unprecedented exigent risk required an unprecedented expedited process,' he said. Introducing the bill a few weeks before the next legislative session, he added, gives time for the corporation law council to react. 'As with all legislation, this bill will go through the complete legislative process, and the Governor has asked the [corporation law council] to review it expeditiously,' Mila Myles, a spokesperson for Meyer, said in a statement. 'He looks forward to a final product that reflects the needs of a broad spectrum of stakeholders.' Michael Houghton, a former president of the state bar, said elements of Delaware's corporate law require prompt revision. Nonetheless, the bill's rapid development was unusual, he said. 'That does not mean that it is necessarily flawed,' said Houghton, who is currently of counsel to Morris Nichols Arsht & Tunnell and chairs a council that advises the governor on Delaware's finances. What Houghton does find abhorrent, however, is the personal attacks Musk and others have launched against Chancellor Kathaleen McCormick, who rescinded the Tesla CEO's pay package. While lawmakers may claim Musk has not influenced the bill, he has certainly turned up the heat on the Court of Chancery, which is typically characterized as exceedingly apolitical and technocratic. Phil Shawe, the CEO of translation company TransPerfect, has spent millions on ads bashing Delaware courts after a bruising legal battle with his former fiancée, who co-founded the company with him. Shawe confirmed that campaign finance records show he separately funded a $1.25 million political action committee during Meyer's 2024 gubernatorial campaign. Shawe said that money was mostly dedicated to criticizing Meyer's main primary opponent, then-lieutenant governor Bethany Hall-Long. 'Any time spent pushing for reform in the Delaware Chancery Court is time well spent,' Shawe said in a statement. Townsend, reiterating that Senate Bill 21 will not help either Musk or Shawe, said the attacks on McCormick and her predecessor have been unacceptable. 'Our courts are rightfully heralded for their work,' he said. He hopes the new bill will give businesses even more reason to stick This story was updated to reflect that Phil Shawe had a legal battle with his former fiancée. 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