Previously, I covered a Nevada Business Court decision applying a common law business judgment rule to Nevada limited liability companies with fiduciary duties. That decision is now being challenged under Nevada’s mandamus procedure. To aid the Nevada Supreme Court in considering the issue, I along with other Nevada business law professors and Nevada business lawyers, filed a request to submit an amicus brief on the importance of the business judgment rule.

The brief contends that Nevada should apply a common law business judgment rule to breach of fiduciary duty claims for Nevada LLCs. We explained that the common law business judgment rule has been a part of American common law for a long time and reviewed the benefits it provides. Most business law professors and business lawyers know the reasons–all standard canon. The business judgment rule lets management take business risks without needing to worry that they will suffer personal liability simply because some business risk does not pan out. Removing it would make managers timid and afraid to do anything different than their peers. Insurance companies would struggle to write policies and price risk if any ordinary business decision could result in liability. We also explained that without the business judgment rule standing behind it, demand futility standards would lose much of their meaning. If you don’t have the business judgment rule, there would often be a substantial risk of liability.

A common law business judgment rule for Nevada LLCs also makes sense in light of Nevada’s clear policy preferences for other business entities. In the corporate context, Nevada enjoys a protective, statutorily-codified business judgment rule. Nevada’s policy has been to limit value-destroying litigation and not police every foot-fault. Applying a common law business judgment rule to LLCs with fiduciary duties maintains consistency with that policy.

At the least, applying the business judgment rule also conforms to existing default expectations. Most persons imposing fiduciary duties in an LLC’s operating agreement likely assumed that ordinary business decisions would be insulated from challenge by a business judgment rule. It’s hard to imagine that anyone would want to manage an LLC and operate a business if every business decision could be second-guessed. Consider the issue for an LLC that operates a restaurant. If you could get sued for changing the menu and losing customers or making any other decision that resulted in a loss, you probably would not agree to fiduciary duties–or to keep running the restaurant.

For Nevada LLCs with fiduciary duties that now operate under the standard assumption that ordinary business decisions enjoy business judgment rule protection, a decision unsettling those expectations would reallocate power within existing LLCs. Minority members would suddenly have more litigation rights. Some might use them immediately and take to court. Others might demand concessions or extract payments in exchange for agreeing to modify operating agreements. It could be a real mess.

Nevada doesn’t have a particularly large body of caselaw, but Judge Gall’s decision was not the first to apply a business judgment rule in the LLC context. Although the decision hadn’t come to mind when I first covered the case, Judge Denton did it over a decade before in Schreck v. Babcock, No. A-09-593059-B, 2013 Nev. Dist. LEXIS 412, *7 (Nev. D. Ct. Aug. 19,2013) (“Nevada’s business judgment rule is codified at NRS 78.138(7). The application of this statute to limited liability companies is not unusual.”). And a Nevada federal court had recognized that many corporate law protections, including the business judgment rule, carry over to the LLC context. Montgomery v. eTreppid Techs., LLC, 548 F. Supp. 2d 1175, 1183 (D. Nev. 2008) (“Federal and state courts have consistently applied the law of corporations to LLCs, including for the purposes of piercing the corporate veil, the ‘alter ego’ doctrine, determining standing, the ‘business judgment rule,’ and derivative actions”). I expect that there are many other Nevada business court decisions doing the same that someone could probably dig out with enough time to comb through old business court decisions involving LLCs. (This might become a project for a research assistant sometime soon.)

Many thanks to Nancy Rapoport, Lori Johnson, Michael Roitman, Jennifer Braster, Sam Castor, J. Robert Smith, Nick Shook, Glenn Gavin, Omar Nagy, Mark Billion, and John Netto for joining in their personal capacities. Thanks as well to the Nevada business lawyers and Nevada in-house counsel who read and commented on the brief but were not able to join because of firm policies and tight time table. Special thanks to James M. Jimmerson for serving as counsel.

As business law professors, we are always teaching leadership and professional responsibility (even if only interstitially), whether we are teaching in experiential, doctrinal, or other settings. Accordingly, an upcoming program hosted by the Section on Leadership of the Association of American Law Schools (which I chair this year) may be of interest. The program, a webinar aptly titled Leadership Development and Professional Responsibility, is next Tuesday, November 18, 1:00 pm – 2:00 pm ET/12:00 pm – 1:00 pm CT/11:00 am – 12:00 pm MT/10:00 am – 11:00 pm PT. Here is the synopsis.

How can law schools cultivate ethical judgment and the capacity for principled leadership among students? How might the Professional Responsibility course provide avenues for exploring broader questions related to lawyer leadership? This AALS webinar explores the relationship between professional responsibility, legal ethics, and leadership formation in legal education and examines how law schools can prepare graduates not only to practice law competently, but to lead with integrity and purpose.

I hope you can join us for this program. Registration is available here.

I tried posting about something else this week, but there’s a gravitational force, so here’s bonus Tesla content.

Honestly, this is what I find interesting and unexpected:

Schwab Asset Management earlier this week pledged to back the pay proposal after a number of prominent retail shareholders said on social media that they would move funds out of brokerages that voted in opposition.

With the caveat that I am not exactly clear on what assets were involved, this is an interesting conundrum of fiduciary obligation and mutual fund voting.

On the one hand, shouldn’t funds vote the way the investors want? On the other, Tesla stans are not the only investors in the fund, and if Schwab believes the pay package is bad for the fund overall, shouldn’t those other investors be protected?

To wit: when adopting its voting choice program, BlackRock explicitly said it wouldn’t just delegate voting decisions to investors; instead, it had a fiduciary obligation to review the range of choices to decide they were all suitable, which is its justification for giving investors only a limited slate of pass through voting options.

But also – and, again, I’m not sure I’m clear on what exactly happened here – if Schwab voted assets not based on the preferences of investors in the relevant funds, but based on the preferences of other clients, that seems to be clearly a violation of fiduciary duty. The SEC once settled an enforcement action against an adviser for voting all funds in accord with union preferences in order to win union business. Schwab can’t use its other business interests to dictate how it votes specific funds.

That’s all I’ve got.

So I guess I wasn’t too far off in my previous post about the Pfizer/Novo Nordisk battle for Metsera; in fact, the case I mentioned was cited in Pfizer’s papers (though of course, Metsera disputes its relevance).

Here’s the thing: the legal ability of Metsera to terminate its deal with Pfizer, and enter into a new agreement, entirely depends on the application of the antitrust laws. Novo’s bid is unquestionably higher; the only difficulty is completion risk, given that it presents greater antitrust hurdles than Pfizer’s bid.

So, in one version of the story, there is no chance that regulators would approve the deal with Novo; therefore, it cannot constitute a superior offer. Moreover, Novo’s proposal to pay Metsera cash up front, skipping antitrust review, is itself a violation of the antitrust laws, and so Metsera cannot claim superiority solely due to that feature.

In another version of the story – the version that Metsera tells in its briefing to the Delaware Court of Chancery – Metsera was initially concerned about antitrust risk, which is why it accepted Pfizer’s bid over Novo’s higher one, but Novo has since been consulting with regulators and now is more confident there is a path to regulatory approval.

Unless a settlement of some kind is reached, VC Zurn will have to decide which is the more plausible story, which depends not only on who thought what in good faith, but also on how regulators would be likely to treat the Novo proposal.

But here’s the thing.

Pfizer’s CEO has been openly cultivating Trump for a while now. Pfizer even got early termination of the antitrust waiting period just before it filed its complaint, during a government shutdown – and I don’t know what the policy is this time around but I remember during the last government shutdown, FTC and DOJ announced there would not be any early terminations.

Meanwhile, the day after Metsera filed its brief in the Delaware Court of Chancery claiming that the path to regulatory approval seemed much smoother, the Wall Street Journal reported that Novo was considering selling its weight loss drugs at a discount on TrumpRx.

Yesterday, though – again, in the middle of a government shutdown – the FTC announced that Novo’s proposed structure for buying Metsera, including the upfront cash payment, might circumvent the antitrust laws.

Today, of course, Trump openly joked (?) about taking a stake in Novo in exchange for clearing a path for the Metsera takeover.

What is VC Zurn supposed to do with this? Does she look at the law on the books regarding anticompetitive mergers? Does she look at the personal relationships between Trump and the respective CEOs? If the latter really is driving the train – and I don’t know, of course, I’m only speculating – is that even a legitimate consideration for Delaware?

Significantly, Leo Strine warned about exactly this problem during the first Trump administration, during a panel at the Tulane Corporate Law Institute. As I blogged at the time:

[Strine] also referenced the recent dispute between Broadcom, Qualcomm, and CFIUS : though he disclaimed expressing an opinion on that particular case, he explained that judges often have to make difficult decisions– as in Williams – about the interpretation of closing conditions that involve regulatory approvals.  In the past, judges could at least be confident that, whether you agree with the regulator or not, regulation was not being done “sideways.”  If, however, regulation is going to be used for other than its original purposes – such as for protectionist purposes – that will affect how courts address after-the-fact disputes about why deals fell through.

Now on steroids, I guess.

And another thing. On this week’s Shareholder Primacy podcast, me and Mike Levin talk about the relationship between state and federal corporate law. Here at Apple, here at Spotify, and here at YouTube.

Back to the bottomless well…

I’ve previously commented on the items up for a shareholder vote next week, Mike Levin and I recorded a Shareholder Primacy podcast about it, and I also spoke about it on Fordham’s Bite Sized Business Law podcast. The proposal that really has my attention is Proposal 3, which would amend Tesla’s 2019 stock compensation plan to do two things: First, to create a reserve of shares for the board to award Elon Musk to replace his 2018 pay package, if the Delaware Supreme Court affirms Chancellor McCormick’s rescission of that package. And second, to authorize Tesla shares to pay other employees, just as part of a normal stock compensation plan. One thing I highlighted on the Shareholder Primacy podcast – and has become a focus of objection by multiple shareholders – is that these two very different proposals are bundled together in a single vote to amend the 2019 compensation plan. That is, if you want to allow Tesla to pay its employees in stock, but you don’t want to restore Elon Musk’s 2018 pay package, there isn’t an option for that; you can have both, or neither.

Is that … okay?

As with many things Tesla does … technically, but not in spirit.

Exchange Act Rule 14a-4(a)(3) requires that proposals be “unbundled,” meaning, that shareholders must be given the opportunity to vote on each material item separately. Though there is little caselaw interpreting what counts as a separate matter that needs to be unbundled, in Greenlight Capital, L.P. v. Apple, Inc., 2013 U.S. Dist. LEXIS 24716 (S.D.N.Y. Feb. 22, 2013), the company proposed a series of charter amendments bundled as a single voting item, and argued that they counted as one proposal to amend the corporate charter. The court rejected that argument, holding that the company had deprived shareholders of the ability to express separate preferences on the different items.

Under that standard, one would think that Tesla absolutely was not permitted to bundle together the two compensation items as a single matter, even though they both come under the heading of “Amendments to the 2019 compensation plan.”

But matters do not rest there. In response to Greenlight Capital, the SEC issued a new CD&I on standards for when matters can, and can’t, be bundled as separate voting items. Among other things, it advised that several “immaterial” charter amendments may be bundled together with a single “material” matter (which contradicted some of Greenlight Capital‘s reasoning), though it also noted that if management “knows or has reason to know” that shareholders would wish to express separate preferences on the different matters, the proposals should be unbundled.

That standard, too, would condemn Tesla’s actions here, except for the kicker. The SEC commented directly on the issue of amendments to stock compensation plans:

Question: Management of a registrant intends to present for a vote of shareholders a single proposal covering an omnibus amendment to a registrant’s equity incentive plan. The amendment makes the following changes to the terms of the plan:

  • increases the total number of shares reserved for issuance under the plan;
  • increases the maximum amount of compensation payable to an employee during a specified period for purposes of meeting the requirements for qualified performance-based compensation under Section 162(m) of the Internal Revenue Code;
  • adds restricted stock to the types of awards that can be granted under the plan; and
  • extends the term of the plan.

Must any of these proposed changes be unbundled into a separate proposal pursuant to Rule 14a‑4(a)(3)?

Answer: No. While the staff generally will object to the bundling of multiple, material matters into a single proposal – provided that the individual matters would require shareholder approval under state law, the rules of a national securities exchange, or the registrant’s organizational documents if presented on a standalone basis – the staff will not object to the presentation of multiple changes to an equity incentive plan in a single proposal. See Section III of Exchange Act Release No. 33229 (Nov. 22, 1993). This is the case even if the changes can be characterized as material in the context of the plan and the rules of a national securities exchange would require shareholder approval of each of the changes if presented on a standalone basis. 

Now, I’m guessing that when this interpretation was developed – and similar guidance was offered in 1993 – no one was anticipating anything like Tesla. They were anticipating a plan that generally was conceived as a whole, had different moving parts, that would be unwieldy to break out into separate pieces. And ordinary course stock compensation plans are very much a matter for board discretion; I could imagine an argument that inviting shareholders to cherry pick aspects of them would perhaps result in undue meddling in management matters. This is why, for example, the Greenlight Capital court held that it would be permissible to bundle together multiple “ministerial and technical matters that do not alter substantive shareholder rights.” (Though James Cox, Fabrizio Ferri, Colleen Honigsberg, and Randall Thomas disagree; in their article on bundling, they argued that the SEC should at least have sought shareholder comment before creating such a significant carveout.) But even if you agree with the carveout in general, that’s very different than what Tesla is doing here, which is bundling a banal stock plan with an extraordinary one-time boon to their CEO and largest shareholder. The proposals differ in purpose, size, conditions, covered employees, level of insider conflict, and tax and accounting consequences, not to mention levels of controversy.

But, the SEC said what it said, and here we are.

And another thing. On this week’s Shareholder Primacy podcast, me and Mike Levin look at how the universal proxy rules have worked out, now three years later. Here at Apple, here at Spotify, and here at YouTube.

Here is Novo Nordisk’s bid for Metsera. Because the deal requires prolonged regulatory clearance, Novo will buy nonvoting convertible shares from Metsera, with the cash to be paid as a dividend to Metsera’s shareholders now. Since the convertibles are nonvoting, no regulatory preclearance is required, and cash gets to Metsera right away. Before NN can convert to voting and take over the company, it has to obtain regulatory clearance.

Which sounds fine except for how this looks a lot like what DOJ called an evasion of antitrust law just a few years ago with Toshiba and Canon.

Here, the parties might argue that this structure is not solely to evade preclearance, as it was there – it’s also to give assurances to Metsera in the context of a contested takeover battle, and meet contractual requirements to qualify as a superior offer. 

Maybe that wins the day but it’s why, I guess, Pfizer says this is an “illusory” offer and Metsera may not terminate the current agreement.

If I’m getting this wrong, though, someone let me know so I can edit/delete and bury my shame. (Commenting doesn’t seem to work well here but feel free to email).

The William S. Richardson School of Law at the University of Hawaiʻi at Mānoa invites applications for a tenure-track faculty position in Business Law to begin in Fall 2026. We seek candidates with a demonstrated record or strong potential for excellence in teaching, scholarship, and service.

We welcome applicants whose research and teaching interests include business associations, corporate law, commercial law, securities regulation, entrepreneurship, or related areas. The successful candidate will join a collegial and interdisciplinary faculty committed to teaching excellence, community engagement, and advancing justice in Hawaiʻi and beyond.
 
Applications must be submitted through the University of Hawaiʻi’s official Work at UH portal.

For full consideration, please apply by November 12, 2025.
 
For inquiries, please contact Professor Alina Ng Boyte at aboyte@hawaii.edu.

Back in June of 2024, in connection with the legislative debate in Delaware over the approval of § 122(18) of the General Corporation Law of the State of Delaware (DGCL § 122(18)), I authored a blog post in which I raised concerns about whether there was adequate understanding of the public policy impacts of the proposal to adopt DGCL § 122(18).  I then wrote:

I have one large and important question as Senate Bill 313 continues to move through the Delaware legislative process: do members of the Delaware General Assembly voting on this bill fully understand the large shift in public policy represented by the introduction of DGCL § 122(18)?  If so, then they act on an informed basis and live with the consequences, as they do with any legislation they pass that is signed into law.  If not, we all must work harder to enable that understanding.

Later that month, I authored and published a second blog post that cross-referenced the earlier blog post and offered several policy-related values relevant to the proposal.

Two-and-a-half weeks ago, I found myself affected by similar concerns about the need for serious, thoughtful policy engagement in Delaware.  The occasion was the Gala Celebration of the Weinberg Center for Corporate Governance at the University of Delaware’s 25th anniversary.  As many readers may know, a large group of policymakers, academics, and practitioners gathered at the University of Delaware for the Gala and an amazing symposium earlier that same day.  Larry Cunningham and his staff did a great job in organizing an impactful day, including the formal Gala program, which featured  a series of Delaware and national luminaries.  Information about the celebration can be found here.  I am grateful for Larry inviting me to speak at the symposium and write a related book chapter on board leadership and for the accompanying invitation to the Gala.

Among the speakers at the Gala was U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins.  The speech is posted on the SEC website here. Bloomberg, among others, also covered the speech here.  Chair Atkins’s remarks, which centered on regulatory reform regarding shareholder proposals, have generated some controversy (see, e.g., here and here).  The Weinberg Center is convening a panel discussion on the SEC’s shareholder proposal rule, Rule 14a-8, in December.

It is Chair Atkins’s speech that night—together with co-blogger Ann Lipton and Mike Levin’s recent Shareholder Primacy podcast on the same—that catalyzes my post today.  I write today not to stake a claim on the substance of Chair Atkins’s remarks.  Rather, I write in the spirit of law reform in general, and especially as it relates to business law.  I became a business lawyer 40 years ago in part because I like the idea that law could encourage people—promoters, managers, investors, employees, contractors, and others—to form and operate business entities that serve public needs and wants. 

As I listened to Chair Atkins’s speech that night, I was most struck by his call for Delaware to clarify its law to assist the SEC in the pursuit of its regulatory initiatives.  (Ann notes this also toward the end of the Shareholder Primacy podcast.)  The essential bundled rationales for that call to action?  Delaware would be supporting the very capital markets that have helped make the state an international corporate formation and governance leader at a time when that leadership has been called into question (expressly referencing the “DExit” movement). Although one might debate (as some have) the substance of Chair Atkins’s request (or, indeed, the appropriateness of using the Weinberg Gala as a forum for making that request), my concern is merely that Delaware’s lawmakers consider and address Delaware’s own public policy in making legislative and regulatory decisions, including interpretive decisions about Delaware’s revered corporate governance rules.

Delaware’s corporate law is broad and deep.  Its relative stability and predictability, among other things (including the expertise of its judiciary), have encouraged venturers to come together to form sustainable businesses—a core public policy value—over a long term.  The existence of commentators with divergent perspectives (e.g., those who have argued that the state’s laws are pro-promoter/manager or pro-stockholder and those who have argued that the law represents a race to the bottom or a race to the top) suggests that Delaware law has delicately—and successfully—balanced and rebalanced the interests of managers (directors and officers) and stockholders over time.

Our federal and state securities laws have a different set of purposes that are founded on distinct public policy judgments.  (Again, Ann alludes to this in the Shareholder Primacy podcast.)  By protecting investors, maintaining fair capital markets, and encouraging capital formation, these laws enable an important—but not exclusive—component of the overall environment for business: corporate finance.  Delaware’s corporate law serves more than that one component.  And it serves corporations of all types and sizes—those that access public capital markets and those that do not.  The corporate governance rules established by the U.S. Congress, the SEC, and Delaware’s General Assembly and courts may overlap, but the reasons for having and enforcing those rules may be quite distinct.

Apropos of these considerations and Chair Atkins’s speech, the Weinberg Center reports that the State of Delaware has asked the University of Delaware’s Institute for Public Administration to study “the intersection between federal rule and state law” in proxy regulation, with a goal of determining how that intersection “implicates Delaware’s corporate franchise.”  I am interested in this work.  I am hopeful that initiatives of this kind will help inform robust public policy debates that, in turn, inform law reform efforts.

With all of this in mind, I write today to encourage Delaware’s influential policymakers to act with the purposes and values of Delaware corporate law in mind when they adjust and fashion corporate governance rules.  With this core focus, policymakers can best assess whether and, if so, how those purposes and values are best served by legal stasis or change.  Without this focus, Delaware lawmaking may produce a less coherent legal framework for business organizations and the venturers who form and participate in them.

LSUS is seeking applications for two different positions–Assistant Professor of Business Law and an Instructor of Business Law. More information about each position can be found below.

Assistant Professor of Business Law

The AACSB accredited College of Business at Louisiana State University Shreveport (LSUS) seeks applications for a 9-month tenure-track position in business law starting August 2026. The selected candidate will report to the Chair of the Department of Accounting and Business Law. Applications will be considered from all candidates who meet our AACSB qualifications.

Responsibilities:

  • Teach business law courses at the undergraduate and graduate levels, in face-to-face and online settings.
  • Produce scholarship at a level consistent with our AACSB Scholarly Academic standards.
  • Participate in service activities at the university, college, and department levels, as well as in community and profession.
  • Participate in the assessment of student learning outcomes and program effectiveness.

Required Qualifications:

  • A Juris Doctor degree from an ABA-accredited law school.
  • Admitted to practice law by the highest court of at least one U.S. state.
  • Evidence of teaching excellence.

Preferred Qualifications:

  • At least one year of demonstrated teaching effectiveness, teaching Business Law classes.

Salary and Benefits:

  • Competitive salary commensurate with experience.
  • Comprehensive benefits package, including health insurance, retirement plan options, and professional development support.

Application Process:

To apply for this position, a CV, cover letter, statement of teaching philosophy, copies of all transcripts that include relevant course work, and contact details of three references should be sent electronically to businessfacultysearch@lsus.edu. Review of complete applications will begin on November 7, 2025; however, the search will remain open until the position is filled. Selected candidates for the interview will be asked to provide three letters of recommendation. LSUS is an Affirmative Action and Equal Opportunity Employer. To be considered, the email subject must be “Tenure Track Business Law Faculty Application.” 

About Louisiana State University–Shreveport College of Business:

National Recognition: Established in 1967, Louisiana State University–Shreveport is a public university known for academic excellence and affordability.

College of Business:

  • One of the largest business colleges in the region.
  • Over 6,500 students enrolled in the Master of Business Administration (MBA) and Master of Health Administration (MHA) programs.
  • Nearly 1,000 undergraduate business students enrolled in majors across accounting, finance, general business, management, and marketing.
  • Faculty represents five continents and more than 18 countries.

Mission-Driven: Grounded in its AACSB-aligned mission to educate, engage, and empower students.

Working Professional-Centric Graduate Programs: Offers 100% accelerated online MBA and MHA programs.

Flexible Learning: Offers both accelerated online and traditional face-to-face undergraduate programs.

Impact-Focused Education: Prepares students to make business decisions that create positive and lasting societal impact.

About Shreveport-Bossier, LA:

Why Consider Living in the Shreveport–Bossier Area

Regional Hub: Educational, medical, and cultural center of North Louisiana.

Population & Size: Metropolitan area of more than 390,000 residents, offering mid-sized city amenities with a manageable pace of life.

Affordable Living: Low cost of living and housing well below national averages, allowing professionals and families to enjoy a higher standard of living.

Easy Travel: Shreveport Regional Airport provides convenient connections to major hubs including Dallas, Houston, and Atlanta—ideal for conferences and research travel.

Cultural Life: Symphony performances, film festivals, art galleries, live music venues, and an array of dining options including Louisiana Creole and Cajun traditions enrich the community.

Outdoor Recreation: Nearby rivers, lakes, and wildlife areas offer hiking, kayaking, cycling, and other outdoor activities.

Balanced Lifestyle: Combines affordability, accessibility, cultural amenities, and natural spaces—making it an appealing place to live, work, and grow.

Instructor of Business Law

The AACSB accredited College of Business at Louisiana State University Shreveport (LSUS) seeks applications for a 9-month instructor position for Business Law starting August 2026. The selected candidate will report to the Chair of the Department of Accounting and Business Law. Applications will be considered from all candidates who meet our AACSB qualifications.

Responsibilities:

  • Teach Business Law courses at the undergraduate and graduate levels, in face-to-face and online settings.
  • Maintain AACSB qualification in any of the four categories (scholarly practitioners, scholarly academic, instructional practitioners, or practice academics).
  • Participate in service activities at the university, college, and department levels, as well as in community and profession.
  • Participate in the assessment of student learning outcomes and program effectiveness.

Required Qualifications:

  • A Juris Doctor degree from an ABA-accredited law school.
  • Admitted to practice law by the highest court of at least one U.S. state.

Preferred Qualifications:

  • At least one year of demonstrated teaching effectiveness, teaching Business Law classes.

Application:

To apply for this position, a CV, cover letter, statement of teaching philosophy, copies of all transcripts that include relevant course work, and contact details of three references should be sent electronically to businessfacultysearch@lsus.edu. Review of complete applications will begin on November 7, 2025; however, the search will remain open until the position is filled. Selected candidates for the interview will be asked to provide three letters of recommendation. LSUS is an Affirmative Action and Equal Opportunity Employer. To be considered, the email subject must be “Instructor of Business Law Application.” 

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 generally exempts public companies from ordinary 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
 FirmResultNotes
 1.Fidelity National FinancialPass 
 2.MSG SportsPass 
 3.MSG EntertainmentPass 
 4.Jade BiosciencesPassJade merged with Aerovate.
 5.BAIYU HoldingsPassAction by Written Consent
 6.RobloxPass 
 7.Sphere EntertainmentPass 
 8.AMC NetworksPass 
 9.Universal Logistics Holdings, Inc.PassAction by Written Consent
 10.Revelation BiosciencesFail97% of votes cast were for moving.  There “were 1,089,301 broker non-votes regarding this proposal”
 11.Eightco HoldingsFailVotes were 608,460 in favor and 39,040 against with 763,342 broker non-votes.
 12.DropBoxPassAction by Written Consent
 13.Forward IndustriesFailThis 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.NuburuFail87% 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 RoyaltyPass 
 16.Tempus AIPass 
 17.AffirmPass 
 18.Liberty LivePendingThis is a split off from a Delaware entity to Nevada
 19.NetcapitalFailThis was a proposed move from Utah to Nevada. It failed with 541,055 votes in favor and 1,456,325 votes against.
 20.Algorhythm HoldingsPendingMeeting set for Nov. 20
 21.Capstone Holding CorpPendingMeeting set for Nov. 18
 22.Oblong, Inc.PendingMeeting set for Dec. 17
 23.HWH International Inc.PassAction by written consent
 24.Twin Vee PowerCatsPendingMeeting set for Dec. 4
 25.Digital Brands Group, Inc.PassAction by written consent

Updated Texas Table

2025 Texas Domicile Shifts
 FirmResultNotes
1.Zion Oil and GasPass 
2.Mercado LibreWithdrawn 
3.Dillard’sPass12,791,756 votes for and 1,477,174 votes against
4.United States Antimony CorporationPassShift from Montana to Texas. 20,626,385 votes in favor.  11,816,235 against. 35,888,464 broker non-votes.