Meta’s Potential Exit from Delaware Sparks Legislative Action
Delaware lawmakers are actively debating a bill that could significantly change the state’s corporate law after Tesla CEO Elon Musk reincorporated his companies elsewhere. News of Meta considering a similar move prompted swift action from Democratic Governor Matt Meyer, highlighting the state’s dependence on corporate franchise fees, which contribute over $1 billion annually—more than 20% of its tax revenue.
Urgent Meetings to Retain Meta
Following a Wall Street Journal report on January 31 about Meta’s potential move, Meyer, new to the governorship, quickly convened online meetings. On February 1, he gathered attorneys representing major corporations like Meta and Tesla, along with members of the Delaware legislature, to discuss the state’s corporate franchise policies.
A second meeting on February 2 included Meta’s corporate secretary Kate Kelly and Dan Sachs, the company’s senior national director of state and local policy, alongside legal experts such as former Delaware Chancellor William Chandler. These discussions aimed to retain Meta by addressing concerns over shareholder lawsuits and corporate governance regulations.
The Implications of SB 21
Less than two weeks later, Delaware lawmakers introduced Senate Bill 21 (SB 21), a legislative proposal that could favor controlling shareholders like Mark Zuckerberg and Elon Musk. If enacted, the bill would:
- Modify the use of independent directors to insulate corporate decisions from court scrutiny.
- Restrict shareholders’ access to corporate records when investigating fiduciary duty breaches.
SB 21 has already passed the Delaware Senate and is expected to be voted on by the House soon. If approved, the law would apply retroactively to cases filed after February 17, potentially limiting shareholder claims against Meta.
Meta and Musk’s Corporate Moves
Musk drew attention to Delaware’s corporate law after a judge ruled his $56 billion Tesla pay package was illegally granted, prompting him to move Tesla’s incorporation to Texas. He has since advised companies against incorporating in Delaware, citing alleged judicial corruption.
Meanwhile, Meta’s potential exit aligns with Zuckerberg’s recent policy shifts, including removing DEI programs and fact-checking measures, possibly in an effort to align with the current political landscape. His presence at Donald Trump’s 2025 presidential inauguration further fueled speculation about Meta’s strategic corporate positioning.
Future of Delaware’s Corporate Status
While Governor Meyer insists Delaware remains the top choice for corporate incorporation, lawmakers and attorneys continue to monitor the potential ripple effects of Meta’s decision. SB 21’s progress through the legislature will determine whether Delaware retains its status as the premier corporate hub or risks a growing “DExit.”
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