68% of the Fortune 500 and 93% of all IPOs in the last 5 years are chartered in Delaware. There must be a good reason.
Delaware has been at the racket since the early 1900s and has a court -- the Chancery Court -- and a body of law -- Delaware Corporation Law -- that addresses and has for more than a hundred years the unique interests of both companies and shareholders.
Delaware's administrative processes allow for one day entity formation, anonymity (only the registered agent of a corporation must be revealed), no franchise tax, no state income tax, and expedited hearings.
One must understand the Chancery Court -- no jury trials meaning no outlandish awards and, rarely, punitive damages, judges who specialize solely in corporate law, a huge body of written and common law, and predictable outcomes -- is very good both companies and investors.
Nevada first contemplated a chancery court in 2009 and its corporation law is a cut and paste job of Delaware. There is no substantive difference; but what is different is the paucity of legal precedent.
Delaware Chancery Court has been spitting out case law for over a century, whilst Nevada has been in the racket for less than 14 years.
Delaware Chancellors are experienced and the legal profession in Delaware is salty and seasoned; not so much in Nevada.
I really cannot find a meaningful difference between Delaware and Nevada other than experience both on the bench and amongst the lawyers.
The law upon which Elon Musk caught his toe is identical in both jurisdictions, so other than a bruised ego, not sure what he thinks the benefit might be.
As to Musk's particular situation, beyond the initial shock, in depth analysis indicates he DESERVED to have his employment agreement voided.
He muscled through the agreement, he wrote the agreement, no evidence of adversarial negotiation, his board included persons who reported to him, were blood relatives (his brother was on the board for goodness sake), and persons who had made once in a lifetime fortunes because of the option grants he provided to them as board comp.
Musk socialized with members of the board and used drugs with some.
Does that sound like the US Securities and Exchange Commission independent board required by virtue of being public?
These facts would be the same in both Delaware and Nevada.
The Chancellor who wrote the opinion -- after the initial shock of Peck's Bad Boy not getting his way -- detailed this in a thoughtful, well-documented opinion that detailed every transgression.
I admit I started out reading it wanting to be critical, but by the time I finished, I said, "WTF, Elon? It's a bloody public company and you only own 13%. Follow the God damn rules."
Musk is not getting nothing -- the board has to go remake itself and negotiate a new agreement that does not violate the basic tenets of corporate governance. You can't put your brother on your board and argue it's independent.
So, leave Delaware? For Nevada? If based on Musk's issues, not the smart move.
This is purely corporate law, not any civil rights or touchy-feely law issues that depend upon emotional juries. There are no juries. This is some very dry stuff.
You can see the makeup of the court and the Chancellor and Vice Chancellors on their website. They are mostly highly seasoned corporate litigators which means they were primarily representing corporations. Lots of trial experience.
Lots of Ivys and Univ Delaware folks.
The /Delaware Chancery Court is highly digitized and incredibly efficient.
Every trial is a non-jury trial which complete negates the emotion of a jury.
I was wrong when I said the Court of Chancery in Delaware had been around since the early 1900s -- it was founded in 1792.
The only thing Nevada lacks -- its Chancery Court is virtually identical to Delaware as to law and procedure -- is longevity (and hundreds of thousands of court decisions) and a bar that is seasoned in that form of law.
68% of the Fortune 500 and 93% of all IPOs in the last 5 years are chartered in Delaware. There must be a good reason.
Delaware has been at the racket since the early 1900s and has a court -- the Chancery Court -- and a body of law -- Delaware Corporation Law -- that addresses and has for more than a hundred years the unique interests of both companies and shareholders.
Delaware's administrative processes allow for one day entity formation, anonymity (only the registered agent of a corporation must be revealed), no franchise tax, no state income tax, and expedited hearings.
One must understand the Chancery Court -- no jury trials meaning no outlandish awards and, rarely, punitive damages, judges who specialize solely in corporate law, a huge body of written and common law, and predictable outcomes -- is very good both companies and investors.
Nevada first contemplated a chancery court in 2009 and its corporation law is a cut and paste job of Delaware. There is no substantive difference; but what is different is the paucity of legal precedent.
Delaware Chancery Court has been spitting out case law for over a century, whilst Nevada has been in the racket for less than 14 years.
Delaware Chancellors are experienced and the legal profession in Delaware is salty and seasoned; not so much in Nevada.
I really cannot find a meaningful difference between Delaware and Nevada other than experience both on the bench and amongst the lawyers.
The law upon which Elon Musk caught his toe is identical in both jurisdictions, so other than a bruised ego, not sure what he thinks the benefit might be.
As to Musk's particular situation, beyond the initial shock, in depth analysis indicates he DESERVED to have his employment agreement voided.
He muscled through the agreement, he wrote the agreement, no evidence of adversarial negotiation, his board included persons who reported to him, were blood relatives (his brother was on the board for goodness sake), and persons who had made once in a lifetime fortunes because of the option grants he provided to them as board comp.
Musk socialized with members of the board and used drugs with some.
Does that sound like the US Securities and Exchange Commission independent board required by virtue of being public?
These facts would be the same in both Delaware and Nevada.
The Chancellor who wrote the opinion -- after the initial shock of Peck's Bad Boy not getting his way -- detailed this in a thoughtful, well-documented opinion that detailed every transgression.
I admit I started out reading it wanting to be critical, but by the time I finished, I said, "WTF, Elon? It's a bloody public company and you only own 13%. Follow the God damn rules."
Musk is not getting nothing -- the board has to go remake itself and negotiate a new agreement that does not violate the basic tenets of corporate governance. You can't put your brother on your board and argue it's independent.
So, leave Delaware? For Nevada? If based on Musk's issues, not the smart move.
JLM
www.themusingsofthebigredcar.com
It looks like Nevada and Texas are going to try and compete. The main thing I see is a politicized judiciary in places like Delaware.....
What is the evidence that Delaware's Chancery Court is politicized; or, that it leans in a specific direction?
https://courts.delaware.gov/chancery/index.aspx
This is purely corporate law, not any civil rights or touchy-feely law issues that depend upon emotional juries. There are no juries. This is some very dry stuff.
You can see the makeup of the court and the Chancellor and Vice Chancellors on their website. They are mostly highly seasoned corporate litigators which means they were primarily representing corporations. Lots of trial experience.
Lots of Ivys and Univ Delaware folks.
The /Delaware Chancery Court is highly digitized and incredibly efficient.
Every trial is a non-jury trial which complete negates the emotion of a jury.
I was wrong when I said the Court of Chancery in Delaware had been around since the early 1900s -- it was founded in 1792.
The only thing Nevada lacks -- its Chancery Court is virtually identical to Delaware as to law and procedure -- is longevity (and hundreds of thousands of court decisions) and a bar that is seasoned in that form of law.
JLM
www.themusingsofthebigredcar.com