Although not much time has passed since I put out updated tables for Nevada and Texas on October 9, I’ve found another four reincorporations to Nevada recently, so I’ve updated these tables below. In the interest of making this readable, I’ve dropped the tables at the bottom and covered the stated rationales at the top.

The four recent firms announcing moves or attempts to move to Nevada include: (1) Oblong, Inc.; (2) HWH International Inc.; (3) Twin Vee PowerCats, Co.; and (4) Digital Brands Group, Inc. In terms of market capitalization, these are all nano-cap firms with market capitalizations under $50 million. Digital Brands Group is larger than the remainder combined with a market capitalization of roughly $38 million. This is a group where cost concerns about franchise taxes may be more material.

The stated rationales cover franchise tax costs, litigation risk environments, transaction planning, books and records actions, and potential D&O savings. As I am reading more of these proxies, I’m also beginning to develop concerns that not every firm reincorporating to Nevada has consulted with a Nevada lawyer about Nevada law. I’ve added some mild finger wagging to try to help.

Before discussing these, I want to drop a few quick notes for counsel drafting filings around Nevada reincorporations.

• Nevada’s statute online is out of date. You can access the Nevada Revised Statutes online, but you shouldn’t trust them until they’re updated. The 2025 revisions to the Nevada statute went into effect on May 30, 2025 upon Governor Lombardo’s signature. Westlaw has updated its version of the Nevada Revised Statutes. As of today, LexisNexis has not yet updated and is just as out of date as the Nevada website.
• The Nevada statute exempts public companies from stockholder inspection actions so long as they keep making their securities filings. The 15% threshold is for private companies.
• The Nevada statute does define controlling stockholders. It’s NRS 78.240. It provides that a controlling stockholder is “a stockholder of a corporation having the voting power, by virtue of such stockholder’s relative beneficial ownership of shares or otherwise pursuant to the articles of incorporation, to elect at least a majority of the corporation’s directors.” The statutory duty “is to refrain from exerting undue influence over any director or officer of the corporation with the purpose and proximate effect of inducing a breach of fiduciary duty by such director or officer.” You will not currently find this on the Nevada website or LexisNexis. You should pull it up on Westlaw or use the legislative materials.

Stated Rationales

Franchise Tax Cost Savings

Oblong

For this particular subset of firms, cost appears to be a material factor. Oblong, Inc. explained that its board seeks to move to Nevada for cost reasons, explaining that it expects to save at least about $175,000 per year. This is how the company put it:

We anticipate tax savings of approximately $175,000 to $200,000 on an annual basis. For the 2025 calendar year, we expect Delaware franchise tax expense will be approximately $175,000 to $200,000. We anticipate that, if we remain a Delaware corporation, for the 2026 calendar year, our Delaware franchise taxes will be approximately the same as 2025 (based on our current capital structure and assets). By comparison, if we redomesticate in Nevada, our current annual fees will consist of an annual Nevada state business license fee of $500, and the current fee for filing the Company’s annual list of directors and officers, based on the number of authorized shares and their par value, would equal $400. (emphasis added)

Interestingly, Oblong’s proxy gives two different numbers for its expected franchise tax cost in Delaware. On page 29, it says it expects $175,000 to $200,000 in franchise taxes for 2025. On page 32 it states that it expects the franchise taxes for 2025 will be $165,000. That’s at least a $10,000 difference.

HWH International

Similarly, HWH also identified cost a concern. Notably, HWH moved via written consent so there will not be a vote. It succinctly explained that “[t]he Company, while incorporated in the state of Delaware, is required to pay a corporate franchise tax each year, however the State of Nevada does not have a franchise tax. We paid franchise tax in the amount of $48,810 for the tax year 2024 and $205,000 for the tax year 2023. We estimate that we will save approximately $37,000 per year on franchise taxes if this proposal is approved.” (emphasis added)

Twin Vee PowerCats

Twin Vee also idenfied franchise tax savings as a rationale, explaining that it recently “paid approximately $25,258 in franchise taxes to the state of Delaware, which will no longer be required to be paid if the Reincorporation is completed. If the Reincorporation is completed, our current annual fees in Nevada will consist of an annual state business license fee of $500, plus the fee for filing our annual list of directors and officers based on the number of authorized shares and their par value, currently equal to $60,000, for a total of $75.” (emphasis added)

Digital Brands Group

Although Digital Brands also identified franchise tax cost savings, it did not specify what they would be. I took a quick look at the number of authorized shares (a billion shares of common stock authorized according to a 10-K) and an out-of-date calculator from Delaware and came up with $200,000 annually. I do not know if that is right and I don’t plan to spend any more time attempting to figure it out as no one is paying me to.

Lower D&O Insurance Premiums

Oblong

Oblong also contends that it hopes for lower D&O premiums as a Nevada firm. It identified “[p]otential cost savings in director and officer (D&O) insurance premiums from reduced litigation and litigation costs, including attorneys’ fees, which can be significant for corporate litigation.”

This potential and hope for lower D&O Premium benefit is something that a good number of firms have identified, but I have not yet been able to find any current D&O insurer that offers a discounted rate for Nevada firms. Nevada firms may end up paying lower rates over time if they don’t have any claims history, but there is not currently any insurer I know of that is offering a discount.

Concern About Delaware’s Litigation Risk Environment

Oblong

Oblong also expressed concern about Delaware’s litigation risk environment. It explained that “there has been an increased risk of opportunistic litigation for Delaware public companies, which has made Delaware a less attractive place of incorporation due to the substantial costs associated with defending against such suits. These costs are often borne by the Company’s stockholders through, among other things, indemnification obligations, distraction to Company management and employees, and increased insurance premiums.”

Twin Vee PowerCats

Twin Vee echoed this concern, stating that its board had “considered the increasingly litigious environment in Delaware, which has engendered less meritorious and costly litigation and has the potential to cause unnecessary distraction to our directors and management team and potential delay in our response to the evolving business environment.”

Digital Brands Group

Digital Brands also echoed these concerns about litigation risk environments:

we believe the Nevada Reincorporation will result in less unmeritorious litigation against the corporation and our directors and officers, which in turn would better allow our directors and officers to focus on the business and save the Company the costs of such litigation. Though the DGCL was recently amended to, among other things, increase protections for officers of a corporation, we believe Nevada strikes a better balance between the benefits and costs of litigation to the Company and its stockholders than does Delaware because Nevada has a statute-focused approach to corporate law whereas Delaware’s approach depends upon judicial interpretation that lends itself to greater uncertainty.

The increasing frequency of claims and litigation in Delaware brought by financially-interested law firms against corporations and their directors and officers creates unnecessary distraction and costs for businesses, especially businesses in competitive and innovative industries. The absence of statutory bright-line standards in Delaware for transactions that may involve a controlling stockholder has encouraged law firms to test new theories of liability and broaden the definition of who is in control, what transactions should be deemed conflicted and how strict the standards should be for cleansing such transactions. (emphasis added)

Predictability and Transaction Planning

Oblong

Oblong expressed concern about Delaware courts creating governance uncertainty and expressed a preference for Nevada’s statutory approach. This is how it put it:

We believe that the recent variety in and unpredictability of judicial interpretation in the Delaware courts will have a chilling effect on corporate decision-making, which could result in a company not engaging in transactions potentially beneficial to stockholders. Nevada courts follow a more statute-based approach to director and officer duties that is less dependent on the vagaries of judicial interpretation in the Delaware courts. The Board considered recent amendments to the Delaware General Corporation Law (the “DGCL”) that appear to attempt to address, at least in part, some of the uncertainty that has been created by recent Delaware court decisions, but the DGCL amendments are untested, subject to judicial interpretation and may not fully mitigate a variety of litigation and business planning concerns for the Company, and the Board believes that Nevada’s statute-based approach provides greater certainty for corporate decision making, which, in turn will benefit our stockholders. (emphasis added)

Twin Vee PowerCats

Twin Vee also discussed predictability. It put it this way:

Nevada’s statute-focused approach to corporate law and other merits of Nevada law and determined that Nevada’s approach to corporate law is likely to foster more predictability than Delaware’s approach at the current time. The Board believes that Nevada can offer more predictability and certainty in decision-making because of its statute-focused legal environment. NRS Chapter 78, which governs Nevada corporations, is generally recognized as a comprehensive and thoughtfully maintained state corporate statute. Among other things, the Nevada statutes codify the fiduciary duties of directors and officers, which decreases reliance on judicial interpretation and promotes stability and certainty for corporate decision-making. As we look to our planned growth, strategic decisions and plan for the years to come, removing ambiguity resulting from the prioritization of judicial interpretation can offer our Board and management clearer guideposts for action that will benefit our stockholders.

Concern about Books and Records Request Costs

Oblong

Oblong also identified Delaware 220 actions as a cost-driver for public firms in contrast to the Nevada approach which directs public company shareholders to the securities filings. It put it this way:

we may be subject to stockholder books and records inspection demands, pursuant to Section 220 of the DGCL, purportedly seeking to investigate alleged mismanagement and wrongdoing, which, in turn, may cause us to expend substantial legal fees and costs in responding to such demands, in addition to the time and distraction for our management team in gathering records and providing information to our lawyers. Although Section 220 of the DGCL was amended on March 25, 2025 (the “2025 DGCL Amendments”) to narrow the scope of such demands and increase the burden on stockholders for obtaining such records, we still expect fewer frivolous books and records demands under Nevada law, as inspection rights are more restricted for stockholders of a public company like Oblong. Specifically, under the Nevada Revised Statutes (the “NRS”), the right of a stockholder of record to inspect books of account and financial statements does not apply to a corporation that furnishes stockholders a detailed, annual financial statement or that has filed certain reports required pursuant to the Exchange Act during the preceding 12 months. (emphasis added)

Digital Brands Group

Digital Brands also expressed this concern, stating that “Nevada law also takes a different approach than Delaware with respect to stockholder inspection rights, which we believe may balance stockholder rights to accountability while mitigating the unmeritorious use of inspection rights.”

Mild Finger Wagging

In the interest of helping make sure people get Nevada law right, I’ve got two things to highlight here. As Nevada’s law is public and available to everyone, I don’t know whether firms will want to clean these details up before any vote or not. I’m calling these little notes finger wags to convey some chiding disapproval.

Books and Records

It’s worth noting that Digital Brands and Oblong describe Nevada law differently. Digital Brands described Nevada law on stock holder inspection rights this way:

The right to inspect the books of account and all financial records of a corporation, to make copies of records and to conduct an audit of such records is granted only to a stockholder who owns at least 15% of the issued and outstanding shares of a corporation, or who has been authorized in writing by the holders of at least 15% of such shares. A Nevada corporation may require a stockholder to furnish the corporation with an affidavit that such inspection is for a proper purpose related to his or her interest as a stockholder of the corporation.

This is incomplete. It’s a direct quote from the Nevada statute, but it does not mention that this provision wouldn’t apply to Digital Brands because it’s a public company. The same statutory provision, as Oblong noted, goes on to say “the provisions of this section do not apply to any corporation that furnishes to its stockholders a detailed, annual financial statement or any corporation that has filed during the preceding 12 months all reports required to be filed pursuant to section 13 or section 15(d) of the Securities Exchange Act, 15 U.S.C. §§ 78m or 78o(d).”

Interestingly, the same language in the Digital Brands proxy also shows up in a number of other proxies, including BAIYU Holding and Elevai Labs Inc. 

Controlling Stockholders

Twin Vee describes Nevada law on controlling stockholders this way:

NRS 78.140 provides a statutory framework for the approval of transactions between a corporation and a director or officer who has an interest in such transaction. Under this framework, such an interested transaction will not be void or voidable if: (a) the interest is disclosed to the board of directors or a committee thereof, and the disinterested directors or committee members approve such transaction in good faith; (b) the interest is disclosed to the stockholders of the corporation, and the stockholders holding a majority of the voting power approve or ratify the transaction in good faith; (c) the interest is not known to the interested director or officer at the time the transaction is brought before the board of directors for action; or (d) the transaction is fair to the corporation at the time it is authorized or approved. The NRS does not contain specific provisions that specify requirements related to transactions with controlling stockholders, but the Nevada Supreme Court has clarified that Nevada’s codified business judgment rule, and not an “entire fairness” standard, applies to judicial review of director and officer actions in the context of a transaction with a controlling stockholder. However, neither the NRS nor Nevada case law has precisely delineated the scope or extent of the fiduciary duties of controlling stockholders as such. (emphasis added)

This isn’t accurate after the 2025 session. The changes went into effect after being signed by the governor. The controlling stockholder duty is explicitly defined in the statute now. The Nevada Revised Statutes on the Nevada website is way too far out of date.

Updated Nevada Table

2025 Nevada Domicile Shifts
	Firm	Result	Notes
1.	Fidelity National Financial	Pass
2.	MSG Sports	Pass
3.	MSG Entertainment	Pass
4.	Jade Biosciences	Pass	Jade merged with Aerovate.
5.	BAIYU Holdings	Pass	Action by Written Consent
6.	Roblox	Pass
7.	Sphere Entertainment	Pass
8.	AMC Networks	Pass
9.	Universal Logistics Holdings, Inc.	Pass	Action by Written Consent
10.	Revelation Biosciences	Fail	97% of votes cast were for moving.  There “were 1,089,301 broker non-votes regarding this proposal”
11.	Eightco Holdings	Fail	Votes were 608,460 in favor and 39,040 against with 763,342 broker non-votes.
12.	DropBox	Pass	Action by Written Consent
13.	Forward Industries	Fail	This is New York to Nevada. Votes were 427,661 for and 96,862 against with 214,063 Broker Non-Votes.  Did not receive an affirmative vote of the majority of the outstanding shares of common stock.
14.	Nuburu	Fail	87% of the votes cast were in favor of the proposal.  11% against 1.6% Abstained. There were 12,250,658 Broker Non-Votes.
15.	Xoma Royalty	Pass
16.	Tempus AI	Pass
17.	Affirm	Pass
18.	Liberty Live	Pending	This is a split off from a Delaware entity to Nevada
19.	Netcapital	Fail	This was a proposed move from Utah to Nevada. It failed with 541,055 votes in favor and 1,456,325 votes against.
20.	Algorhythm Holdings	Pending	Meeting set for Nov. 20
21.	Capstone Holding Corp	Pending	Meeting set for Nov. 18
22.	Oblong, Inc.	Pending	Meeting set for Dec. 17
23.	HWH International Inc.	Pass	Action by written consent
24.	Twin Vee PowerCats	Pending	Meeting set for Dec. 4
25.	Digital Brands Group, Inc.	Pass	Action by written consent

Updated Texas Table

2025 Texas Domicile Shifts
	Firm	Result	Notes
1.	Zion Oil and Gas	Pass
2.	Mercado Libre	Withdrawn
3.	Dillard’s	Pass	12,791,756 votes for and 1,477,174 votes against
4.	United States Antimony Corporation	Pass	Shift from Montana to Texas. 20,626,385 votes in favor.  11,816,235 against. 35,888,464 broker non-votes.

Look, I get why courts are hesitant to allow securities fraud plaintiffs to state a claim based on false pretensions to corporate “ethics.” Courts fear this would cast too wide a net; Matt Levine’s “everything is securities fraud” would become literally true if any kind of corporate misconduct rendered an ethical code “false,” such that the code itself becomes a violation of Section 10(b). And that, as I have previously written, erodes the line between state law governance claims, and federal law fraud claims.

Still, I find it maddening when courts choose to dismiss these kinds of claims on the ground that ethical codes must be puffery because they are required by regulators. For example, the court in Andropolis v. Red Robin Gourmet Burgers, Inc., 505 F. Supp. 2d 662 (D. Colo. 2007), “A company’s essentially mandatory adoption of a code of ethics simply does not imply that all of its directors and officers are following that code of ethics. In fact, the mandatory nature of the adoption of such a code makes clear that all public companies—whether run by crooks or angels—will adopt just such a code.”

May I make the radical suggestion that the fact that a code is mandatory, and disclosure is mandatory, suggests that regulators believe that these codes are in fact material to investors and that fact should weigh against a puffery finding? Doesn’t it undermine the regulatory scheme for courts to simply declare certain legal requirements to be so much paperwork? GAAP financials are also required; are those per se immaterial as well?

Anyway, the latest example of the genre comes from In re Exscientia P.L.C. Sec. Litig., 2025 U.S. Dist. LEXIS 201398 (D.N.J. Oct. 10, 2025), where plaintiffs alleged that sexual harassment by a corporate CEO rendered the company’s code of ethics misleading. As the court put it:

Companies whose securities trade on American financial markets must adopt a code of conduct/ethics (or “explain why [they have] not done so”). 17 C.F.R. § 229.406(a); see also NASDAQ Rule 5610. Because companies are required to adopt codes of conduct, “the publishing of a code is not actually a statement or representation that it will be followed.” …And because companies must adopt codes of conduct, “[i]nvestors . . . gain no information about a corporation by its adoption of such a code.”

(citations omitted).

I beg to differ. As the Second Circuit has held (umm, inconsistently), for these kinds of situations, we should conduct a thought experiment about what would have happened had the company remained silent. And if, in the face of a regulatory obligation to adopt and disclose a code of ethics, a company entirely failed to do so, wouldn’t investors draw some pretty harsh conclusions? And doesn’t that mean, in turn, that the code has some informational value?

To be fair, the Exscientia court did not leave the matter there; the opinion goes on to note that in some cases, courts have permitted 10(b) claims to proceed based on violations of ethics codes, such as when the underlying misconduct was “pervasive.” In my view, then, the proper analysis is to recognize that the mere existence of a code of ethics does not imply there will never be violations of the code, but it does imply that the code exists, meaning, that there is some good faith effort to comply with its principles, such that the code is rendered false if no such effort is made. Because – as I argued in my paper addressing this – sometimes when courts say a statement is too “vague” for investors to rely upon, what they really mean is, sometimes a statement is so vague that it is consistent with (and thus is truthful as applied to) a very wide range of underlying facts. But it can still be rendered false if the underlying conduct is at the extremes, and in those cases, liability should follow.

And another thing. New Shareholder Primacy podcast! This week, me and Mike Levin talk about SEC Chair Paul Atkins’s Weinberg Center speech at the University of Delaware. Here at Apple, here at Spotify, and here at YouTube.

But if he’s behind this campaign, he needs to file on Schedule 14A.

(and if it’s a Tesla shareholder with a $5 million stake, they need to file with the SEC as well)

I spoke to Law.com about the potential switch to semi-annual reporting, and one of the questions I was asked concerned securities fraud risk – more? less?

Answer: it’s complicated.

On the one hand, fewer statements means fewer potentially false statements, and so fewer opportunities for someone to bring a lawsuit over what you say.

On the other hand, probably a lot of companies will continue to speak to the market – and even voluntarily disclose quarterly earnings. Except, they may not include all of the details that a 10-Q would include. Depending on what they choose to disclose, and whether they change their practices over time, there might be some vulnerability to a charge of misleading half-truths/omissions.

Additionally, semi-annual reporting means the market will be receiving less information on the company, and the information it does receive may come as a surprise, resulting in more volatility. Surprise information, coupled with a big price movement, is the stuff securities fraud actions are made of. Fewer disclosures means fewer opportunities to telegraph changed expectations and slow walk the stock in a particular direction.

But on the other hand! Securities fraud actions live or die by the event study – proof that the market was efficient, and proof that the false statements (and revelations of the truth) impacted pricing. But price movements are much harder to detect when the stock price is volatile ordinarily; it takes an unusually large swing to identify the impact of a particular disclosure. That may make it hard for plaintiffs to assemble the proof they need, either for the merits or for class certification.

So. I guess we’ll see. Unless everything is shifted to arbitration, in which case, we won’t.

And another thing. On this week’s Shareholder Primacy podcast, Mike Levin and I talk about Duke Energy’s supermajority voting requirements and the attempts to change them. Here at Apple, here at Spotify, and here at Youtube.

We’re at about two months since the last update on this front, and I wanted to share my current chart for 2025. As always, if you know about any moves that I’ve missed, please reach out.

I’ve got updated charts, differences of opinion about how well-developed Nevada’s case law is, some highlights and confusion about the Glass Lewis blog post on reincorporation that dropped today, and a quick highlight of the Guess, Inc. proxy that revealed its board had voted to attempt to move to Nevada before a take-private offer arrived.

Nevada

Nevada had another two public companies announce attempts to move to Nevada, Algorhythm Holdings and Capstone Holding.

2025 Nevada Domicile Shifts
	Firm	Result	Notes
1.	Fidelity National Financial	Pass
2.	MSG Sports	Pass
3.	MSG Entertainment	Pass
4.	Jade Biosciences	Pass	Jade merged with Aerovate.
5.	BAIYU Holdings	Pass	Action by Written Consent
6.	Roblox	Pass
7.	Sphere Entertainment	Pass
8.	AMC Networks	Pass
9.	Universal Logistics Holdings, Inc.	Pass	Action by Written Consent
10.	Revelation Biosciences	Fail	97% of votes cast were for moving.  There “were 1,089,301 broker non-votes regarding this proposal”
11.	Eightco Holdings*	Fail	Votes were 608,460 in favor and 39,040 against with 763,342 broker non-votes. The proposal was filed in 2024 and the vote results were announced in 2025. It’s on the list for now, but you could also count it in 2024.
12.	DropBox	Pass	Action by Written Consent
13.	Forward Industries	Fail	This is New York to Nevada. Votes were 427,661 for and 96,862 against with 214,063 Broker Non-Votes. Proposal did not obtain majority of outstanding shares.
14.	Nuburu	Fail	87% of the votes cast were in favor of the proposal.  11% against 1.6% Abstained. There were 12,250,658 Broker Non-Votes.
15.	Xoma Royalty	Pass
16.	Tempus AI	Pass
17.	Affirm	Pass
18.	Liberty Live	Pending	This is a split off from a Delaware entity to Nevada
19.	Netcapital	Fail	This was a proposed move from Utah to Nevada. If failed with 541,055 votes in favor and 1,456,325 votes against.
20.	Algorhythm Holdings	Pending	Meeting set for Nov. 20
21.	Capstone Holding Corp	Pending	Meeting set for Nov. 18

The Capstone Holding proxy contains this rationale for Nevada with an interesting bit bolded:

Nevada is a nationally-recognized leader in adopting and implementing comprehensive and flexible corporation laws that are frequently revised and updated to accommodate changing legal and business needs. In light of our growth, our Board believes that it will be beneficial to the Company and its stockholders to obtain the benefits of Nevada’s corporation laws. Nevada courts have developed considerable expertise in dealing with corporate legal issues and have produced a substantial body of case law construing Nevada corporation laws. Because the judicial system is based largely on legal precedents, the abundance of Nevada case law should serve to enhance the relative clarity and predictability of many areas of corporation law, and allow our Board and management to make business decisions and take corporate actions with greater assurance as to the validity and consequences of such decisions and actions.

This is not something I ordinarily hear about Nevada. My view is that our caselaw is somewhat limited, but that limitation is mitigated by our clear statute. Curious, I searched around on EDGAR and found a few other companies shifting to Nevada had used similar language in the past:

• Intelligent Buying in 2020. This was a proposal to go from California to Nevada.
• HFactor in 2023. This was a proposal to go from Georgia to Nevada.
• Oracle Health in 2022. This was a conversion from Delaware to Nevada.

Notably, this language contrasts with Fidelity National Financial‘s proxy which stated:

Nevada case law concerning the application of its statutes and regulations is more limited than in Delaware due in part to Nevada’s more statute-focused approach. As a result, to the extent Nevada’s statutes do not provide a definitive answer and a Nevada court must make a determination about issues concerning the Company’s governance without clear guidance or precedent, the Company and its stockholders may experience less predictability with respect to whether certain corporate decisions or transactions are proper and/or the extent to which stockholders maintain the right to challenge such decisions or transactions.

Texas

Texas recently picked up United States Antimony Corporation from Montana.

2025 Texas Domicile Shifts
	Firm	Result	Notes
1.	Zion Oil and Gas	Pass
2.	Mercado Libre	Withdrawn
3.	Dillard’s	Pass	12,791,756 votes for and 1,477,174 votes against
4.	United States Antimony Corporation	Pass	Shift from Montana to Texas. 20,626,385 votes in favor.  11,816,235 against. 35,888,464 broker non-votes.

Glass Lewis on Reincorporation

Earlier today, Glass Lewis released a blog post on reincorporation. I want to highlight a few findings and flag my concerns about the analysis on some points:

• Reincorporation attempts are on the rise. Glass Lewis evaluated 29 proposals in 2025, a 70.06% increase from 17 proposals in 2024 and a 45% increase above the 20 proposals in 2023.
• Controlled companies were much more likely to reincorporate. Glass Lewis found that 55% of the companies in their set had “significant or controlling shareholders”
• Nevada surpassed Delaware as a reincorporation destination with 13 firms announcing for Nevada and 8 for Delaware.
• “Delaware companies have faced an increasingly litigious environment where shareholder lawsuits and the amount of plaintiff fees awarded have increased.” 

All of these top-line findings make sene to me. I appreciate being able to see the Glass Lewis post as a way to cross-check my attempts to monitor this space. My largely hand-compiled set seems to have more firms than Glass Lewis. For example, Glass Lewis states:

While all but one reincorporation proposal from the 2025 proxy season was approved, average support for these proposals declined from 88.7% in 2024 to 81.1%. Revelation Biosciences was the only company that failed to receive majority support, with just 35% of the votes cast in favor and 60.9% abstaining.  The overall decline in shareholder support indicates that shareholders were more critical of these proposals than in past seasons, particularly when the company proposed to leave Delaware.

This gave me pause for two reasons: (1) I don’t think that is correct factually; and (2) I have four other failed votes on my list, Eightco Holdings, Nuburu, Netcapital, and Forward Industries. Let’s run through my quibbles.

(1) The Math Seems Wrong

This is the Revelation Bioscience 8-K announcing results. Here is how it presents the vote information:

My calculation had 97% of the votes cast being in favor of the proposal. There were 2,956,575 votes in favor, 73,597 against, and 20,134 abstain. There were also 1,089,301 broker non-votes. Technically my math came out to 96.92716075% in favor. I’m not confident relying on the Glass Lewis post to conclude that shareholders are growing more critical of these proposals. It wasn’t just 35% of the votes cast that were in favor in Revelation Biosciences, it was about 97% of the votes cast being in favor. It didn’t pass because of the large number of broker non-votes.

(2) There Are Other Failed Votes

Here, I have five failed votes in 2025. It could be four total if you count Eightco in 2024. But I just don’t think it’s right.

• Eightco could go in 2024 or 2025 as the proposal came in December 2024 and the vote result came out in January 2025. I have it on my list, but it could just as easily be excluded.
• Nuburu held their meeting on July 9, 2025, and the results came out on July 14, 2025.
• Netcapital held its meeting on September 11, 2025, and the results came out on September 12, 2025.
• Forward Industries had results come out on August 12, 2025. Although it got a majority of votes cast, it did not win a majority of outstanding shares.

It may just be that I’m trying to catch anything that pops up on EDGAR and Glass Lewis is using a more limited set of companies on this one.

Other Concerns with Glass Lewis Post

But there are a few other things that jumped out at me as well: (1) Their charts seem to miss more reincorporation proposals; (2) the Nevada description isn’t quite right; and (3) it omits the Delaware Supreme Court opinion in Maffei.

(1) The Chart Omits Proposals

I haven’t tried to catch every reincorporation this year, so I don’t have a complete dataset here, but I think their chart on companies moving does not include all the 2025 action. Here, Glass Lewis has two companies attempting to go to Texas and I’ve got four. I also haven’t tried to track everything, just companies going to Nevada or Texas. This is the Glass Lewis chart:

It may be that Glass Lewis has their own internal definition for the 2025 Proxy Season and that their set is only capturing that information. It’s not explicit in the post, so that may explain the differences.

(2) Nevada Has Long Had A Specialized Business Court

I also want to drop a note about this line in the Glass Lewis post that could be read as indicating Nevada just now established a specialized business court.

Nevada’s amendments included: defining controlling shareholders and the fiduciary duties of controllers, establishing safe harbors in conflicted transactions, making certain adjustments to Nevada’s statutory business judgment rule, and establishing a specialized business court.  

Here, I want to add a footnote that Nevada already has a specialized business court. It’s a business court docket handled by a subset of Nevada’s elected judges. The business court judges are currently selected by the Chief Judges in Clark and Washoe county from among the pool of elected judges. In the 2025 session, Nevada achieved first passage for a constitutional amendment to authorize the creation of an appointed business court. We also have a recently formed Judicial Commission to look at reorganizing and modernizing the existing business court.

(3) The Most Relevant Maffei Decision Came From Delaware’s Supreme Court

The Glass Lewis post states that:

recently the Delaware Court of Chancery and Delaware’s Supreme Court issued certain decisions on cases, specifically Maffei v. Palkon (TripAdvisor) and Tornetta v. Musk (Tesla), which were viewed as unfavorable toward controlling shareholders.

It is true that the Chancery decision in Maffei was not all that long ago. But the Glass Lewis post cites to a March 2024 Chancery opinion denying Maffei’s request for an interlocutory appeal. It does not mention that the underlying decision was reversed by the Delaware Supreme Court and that the controlling decision on the issue is now this February 2025 Delaware Supreme Court decision.

Guess, Inc.

Although I didn’t add it to the chart, Guess, Inc. also recently revealed that it had planned to propose a move to Nevada before a take-private offer arrived. On October 3, it put out a preliminary proxy statement with some interesting disclosures:

In August 2024, the Guess Board created a committee of the Guess Board comprised solely of independent and disinterested directors to evaluate a potential redomestication of Guess to a jurisdiction outside of Delaware (the “Redomestication Committee”). Willkie Farr and Gallagher LLP (“Willkie”) was retained by the Redomestication Committee as its legal counsel.

In November 2024, WHP approached Paul Marciano and Carlos Alberini regarding a potential strategic transaction involving Guess.. . .

In early February 2025, following months of deliberation, the Redomestication Committee of the Guess Board recommended, and the Guess Board resolved, that it was in the best interests of Guess and its stockholders for Guess to redomesticate to Nevada.

On March 13, 2025, the Guess Board received a letter from WHP. . . containing a non-binding proposal to acquire the outstanding shares of Guess Common Stock . . .

Following receipt of the WHP Proposal, the Redomestication Committee ceased consideration of a potential redomestication of Guess, and no such redomestication was ever effectuated.

What interests me about this is the timeline when companies consider whether they want to shift from one jurisdiction to another. It appears that Guess ran a seven-month process with an independent committee and counsel to evaluate the options. What we don’t know is the reasons the committee and board had for picking Nevada. Corporations often give different reasons in their proxy statements and it has been interesting to follow their rationales.

Out of Delaware’s Court of Chancery, we have another tale of messy startup contract drafting, with facts that are increasingly bizarre and horrifying.

Consultant was hired by a startup, and the startup fell into arrears paying its bills.  The CEO and sole director offered a warrant for stock in lieu of payment, at a cheap (“practically free”) exercise price.  The company’s counsel (Wilson Sonsini) drafted the warrant for 1% of outstanding shares at the time of the warrant’s issuance.  The consultant’s attorney then amended the agreement to say 1% of shares at exercise.  The consultant returned the signed amended agreement to the CEO, but not in blackline and with no warning of the change.  The CEO, apparently without reading it, signed the revised agreement.  The agreement was recorded on the company’s books as being for 100,000 shares, i.e., 1% at time of issuance.

Later, the company conducted a stock split, and the warrant was revised on the company’s books to reflect 1 million shares.  At one point, KPMG audited the company for a counterparty considering a transaction, and flagged the discrepancy, but the company made no change.

Eventually – plot twist! – the consultant apparently got into some kind of criminal trouble, and asked the CEO for help paying attorneys’ fees.  The CEO offered a personal loan, secured by the warrant.  The CEO drafted a security agreement that identified “a warrant to purchase Common Stock in the Issuer for one million shares” plus proceeds from their sale.

The consultant then defaulted on the loan, and the CEO transferred ownership of the warrant to himself. 

Then, the company went public via SPAC.  The CEO exercised the warrant for 1 million shares, which was converted into 121,730 shares of the new entity.  The CEO’s shares were subject to a lockup; as is not atypical in SPACs in those days, the new entity traded at over $30 per share, but crashed before the CEO sold.  The company was eventually acquired at a valuation of 74 cents per share.

So the consultant sued, claiming that the warrant should have entitled her to 1% of the outstanding shares at the time of exercise, which would have entitled her to nearly 8 times more shares in the post merger entity than those claimed by the CEO.

After trial, VC Fioravanti held:

(1) Not reading the consultant’s version of the warrant was no excuse; the CEO’s contract was binding.  Nor was it an excuse for the CEO to claim that, under Delaware law, only boards can authorize a fixed percentage warrant; he was the sole director and thus he was the board.

(2) Because the security agreement for the loan referenced a warrant for 1 million shares – and no such warrant in fact existed – the loan was unsecured under Delaware’s version of the Uniform Commercial Code.

(3) Therefore, the CEO improperly converted the entire warrant by exercising it for 1 million shares

(4) The CEO owed the consultant the entirety of the shares described in the warrant, i.e., eight times the number of shares in the post merger entity than he actually received at –

(5) pre-lockup prices, because one can speculate that maybe the consultant, had she claimed the shares, would have agreed to a lockup, but we don’t know.  So, a total judgment of in excess of $27 million.

So, first of all – whew.  Second of all, while I’m sure there are many such cases, I’m immediately reminded of Kingfishers v. Finesse, which also involved a rushed startup agreement (for a SAFE), which involved a six page contract with an obvious drafting problem but the investor signed without reading it. Litigation continues.

And third of all, well, look, I am not a contracts or secured transactions specialist, and I’m not sure it would have much of a financial difference anyway, but it seems to me that even the most generous, consultant-friendly reading of this series of events would suggest that, at absolute minimum, there was a meeting of the minds that the equivalent of 1 million pre-merger shares were to be used as security for the loan, and so the CEO should have been able to claim at least that many (even if he improperly converted more than that number).  Maybe the UCC wouldn’t permit such baby-splitting but it seems awfully harsh to conclude that there was no security interest for the loan at all.

In that respect, as corporate law becomes more contractual (see here and here and here and here), I wonder how much room there will continue to be for equity, and how much corporate disputes will come to resemble the creditor-on-creditor violence we see in today’s debt markets.

And another thing.  On this week’s Shareholder Primacy podcast, Mike Levin and I talk about Chancellor McCormick’s recent decision in the Activision merger litigation, and about the concept of corporate personhood.  Here at Apple, here at Spotify, and here at Youtube.

Seton Hall faces a need for a visitor to teach their four-credit Business Association course this spring. The class is taught in the daytime, in person. Syllabi and teaching materials are available from faculty who ordinarily teach the course there. If interested, contact:

Devon Corneal, M.S., JD (she/her/hers)
Associate Dean for Academics 
Seton Hall University School of Law
One Newark Center 
Room 307
Newark, NJ 07102
+1.973.642.8726
devon.corneal@shu.edu

This week, the Second Circuit issued an opinion reversing a district court’s dismissal of a securities fraud complaint filed against The Hain Celestial Group. The facts are these.

The plaintiffs alleged that Hain Celestial Group, and certain of its officers, engaged in a channel stuffing scheme by offering various concessions to distributors, so that it could book sales early and meet Wall Street expectations.  Allegedly, Hain failed to properly account for the concessions that it offered, which were accomplished through “off book” arrangements.  Distributors were granted an “absolute right to return,” with one employee reportedly processing hundreds of thousands of dollars in returns in one quarter – but the sales were included in Hain’s financial results regardless.

Eventually, as with all channel stuffing schemes, things fell apart, and the whole thing ended in the restatement of several years of financial results and a dramatic drop in sales.

The Second Circuit first held that the plaintiffs had properly alleged misstatements in violation of Section 10(b).  Restatements are a per se admission of falsity, so that covered the financials.  Further, Hain had engaged in misleading half-truths when it attributed its purportedly positive results to customer demand, rather than the distributor concessions.

As for scienter, Hain’s CEO, Chair, and founder sold 66% of his stock during the class period; the CEO of Hain North America sold 74%.  Meanwhile, confidential witnesses stated they had personal knowledge of these defendants directing the sales practices at issue.  Confidential witnesses also stated that they heard the individual defendants affirmatively attempt to conceal these practices – by telling employees not to talk about them, and so forth.

Finally, Hain had shifted personnel in a suspicious manner.  The CFO left in 2015 after only two years, allegedly after objecting to the CEO over Hain’s accounting.  Another executive in charge of accounting was demoted.  Two other finance executives resigned mid class period.  The CEO of Hain North America was removed.  The CFO resigned with the restatements, new financial personnel were brought on, and the CEO/founder resigned in 2018.

Collectively, then, the Second Circuit concluded that plaintiffs had alleged scienter, and remanded to the district court for further proceedings.

It seems very difficult to quarrel with these conclusions, and normally, I’d leave it as, this is a securities case with overwhelming prima facie indicia of fraud.  Not even that interesting, legally, except –

Let’s take a step back for a minute.

In 2016, Hain announced that its financial results would be delayed while it reviewed its accounting.  In 2017, it still had not filed its financial results, had received subpoena requests from the SEC, and announced that it had expanded its investigation to include historical periods.  That’s when the CEO of Hain North America was removed, and the company was warned that due to its failure to file financials, it was subject to NASDAQ delisting.

In 2017, Hain finally filed its 2016 financial results, and restated its finances for 2014 and 2015.  The restatements revealed that instead of hitting Wall Street consensus earnings predictions for each quarter, it in fact had missed them every quarter.  At the same time, several finance personnel, including the CFO, were fired.  In 2018, the SEC concluded a two year investigation and settled with Hain on internal books and records charges.

The first securities cases were filed in 2016, and were eventually consolidated into a single action.  The district court dismissed the complaint in 2019, and the amended complaint in 2020.  The Second Circuit reversed that dismissal and remanded in 2021, at which point, the district court dismissed for a third time in 2023.  The second appeal was docketed in 2023, argued in December 2024, and finally decided nearly a year later in September 2025.

It’s now been over nine years since this company started to unravel, and despite admitted extensive accounting problems, despite the ultimate departure of multiple top officers – including the founder/CEO – despite the turnover of almost all the accounting personnel, despite a dramatic shift in financial results, the plaintiffs will only now get to begin discovery.

What are we doing here?

I know, I know, nuisance suits, yadda yadda yadda, but doesn’t this all suggest that perhaps maybe the PSLRA – and the layers of doctrine that have been piled on top of it – overcorrected a bit?

And as we head into this period where the SEC is operating (when the government is open) with far less staff, will be conducting (apparently) fewer enforcement actions and fewer routine reviews, as quarterly reporting will apparently be eliminated, at the same time multiple states race to eliminate fiduciary constraints on managerial behavior – in this period, private securities actions may be one of the few remaining deterrents to corporate misconduct. And we seem to have kneecapped those as well.

Update: Well, this is awkward. A reader points out that even though the Second Circuit did, in fact, point to a restatement as per se falsity, in fact, there was no big R restatement in this case – not because the GAAP accounting was correct, Hain admitted it wasn’t – but because it concluded the errors were immaterial, and it made non-restatement “revisions” instead. Not sure if that changes the picture, but it’s worth mentioning.

Also, quick plug.  I was privileged to participate in the 2025 Accountability in a Sustainable World digital conference, sponsored by the Center for Accounting Research and Education.  The full online program is now available here; my remarks – Corporate Sustainability Disclosure: Who’s Listening? – are available if you scroll down a few videos after the lunch break.

And another thing.  On this week’s Shareholder Primacy podcast, Mike Levin and I talk about mandatory arbitration of federal securities claims.  Here at Apple, here at Spotify, and here at YouTube.