A year after Elon Musk urged companies to abandon Delaware as their legal home and follow Tesla to Texas, legislators in the two states on Wednesday considered bills in an unusual battle over corporate law changes that critics say would benefit powerful shareholders, our colleague Tom Hals reports.
In Delaware–until recently the undisputed home to Corporate America–lawmakers took up a bill meant to dissuade companies from leaving by creating "safe harbors" from litigation for transactions with controlling shareholders. Witnesses told the Delaware Senate Judiciary Committee the bill was not driven by Musk, whose $56 billion Tesla pay package was rescinded by a state judge last year, but by several recent court decisions that created uncertainty about the law. Opponents say it’s a "billionaires' bill" that favors controlling shareholders.
More than 1,600 miles away in Austin, Texas legislators discussed a bill that would enshrine the so-called business judgment rule that protects boardroom decisions, even ones that turn out poorly, as long as they were taken in good faith by independent directors. Lawmakers did not take action on either proposal.
