Overview
Steptoe attorneys Jarod Stewart, Nate Kritzer, Brent Hanson, and Julie Wilson Lascano authored an article that appeared in Texas Lawyer titled, "Choosing a Corporate Home: Deep in the Heart of Texas?" The article discusses how businesses are reassessing Delaware as the go-to state for incorporation following the Delaware Chancery Court's reversal of Tesla's $55.8 billion compensation package for Elon Musk. This has spurred Delaware to amend its corporate laws and prompted Texas to present itself as an alternative with new business-friendly legislation and specialized business courts. Texas's business courts, covering major cities, focus on complex, high-value disputes, and have stricter requirements for shareholder derivative actions compared to Delaware. Pending Texas legislation seeks to impose higher ownership thresholds for such suits and impose tighter limits on access to corporate records. Both Delaware and Texas offer safe harbor protections for conflicted transactions, though Delaware recently codified broader protections retroactively. However, Texas's pro-business stance brings risks, notably through its Securities Act, which imposes liability without proving intent. Corporations seeking to avoid rigorous litigation standards may benefit from Texas's evolving legal environment.
