Delaware Supreme Court Ruling Eases Corporate Redomiciling from the State
In a landmark decision, the Delaware Supreme Court has ruled that companies seeking to redomicile out of the state may face fewer obstacles, potentially changing the corporate landscape.
The decision, issued unanimously by a 5-0 court, overturned a lower court ruling that imposed a strict "entire fairness" standard on TripAdvisor's proposed move to Nevada. Under this standard, shareholders could hold controlling shareholder Greg Maffei liable for damages if the move benefited him at their expense.
However, the Supreme Court held that the more lenient "business judgment" standard should apply in cases where shareholders raise mere speculative concerns about future liabilities. This ruling affirms the state's long-established policy of promoting flexibility and private ordering for corporations.
Delaware's business-friendly laws have historically made it a popular haven for companies. However, recent years have seen an exodus of high-profile firms, including Tesla (TSLA), which relocated to Texas, and William Ackman's management company, which plans to move to Nevada. Facebook parent Meta Platforms is also reportedly considering moving to Texas.
The Delaware Supreme Court's decision could make it easier for other companies to follow suit, potentially altering the state's status as the corporate home to a significant portion of the Fortune 500.