Delaware lawmakers put aside protests from major institutional investors and approved fast-tracked legislation Tuesday night that backers say will protect its status as the corporate capital of the world after criticism by billionaire Elon Musk and other influential business titans rattled public officials.
The bill is headed to Gov. Matt Meyer, a Democrat who met with corporate leaders about their concerns about precedent-setting court decisions governing corporate conflicts of interest and urged lawmakers to quickly pass changes to the law.
They did, sending the bill through both chambers within two weeks of its introduction, despite shareholders’ lawyers and pension funds slamming it as a giveaway to billionaires and corporate insiders. The House approved it Tuesday night, 32-7, after a unanimous Senate earlier in March.
Delaware’s experienced corporate law courts and their well-developed body of corporate case law have become the go-to destination to settle all sorts of business disputes as the legal home of more than 2 million corporate entities, including two-thirds of Fortune 500 companies.
The state also reaps billions of dollars from the activity, making lawmakers nervous that corporations could flee Delaware and undercut a major source of revenue.
In hearings, lawmakers were warned by corporate lawyers and state officials that businesses were contemplating moving their legal home — a “Dexit,” as it has been dubbed — and that startups are being advised to incorporate elsewhere, such as competitors Nevada or Texas.
A legal challenge is widely expected after Meyer signs the bill.
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