Online travel company TripAdvisor can move its corporate charter from Delaware to Nevada.
In a closely watched suit, Vice Chancellor Travis Laster ruled that the shareholder could not prove that moving the domicile would damage those holding stock.
TripAdvisor and its majority owner approved the move, citing the possibility of fewer lawsuits in Nevada and lower franchise fees.
The Silver State has set up an incorporation system that is more friendly to chief executives.
Laster noted that TripAdvisor might be taken private and no longer have to deal with shareholders’ suits. However, both sides sought a ruling.
Larger companies often incorporate in Delaware, citing the ability of Chancery Court to handle disputes armed with a large body of case law.
Recently, Tesla CEO Elon Musk moved the domicile of his Space X business from Delaware to Texas after Chancellor Kathleen McCormick ruled that a board of insiders rubber-stamped a $56 billion pay package nearly 40 times larger than any other CEO’s pay package.
Earlier, Philip Shawe moved the incorporation of TransPerfect to Nevada after a continuing battle over fees paid when Shawe and his former fiancee could not agree on a buyout of the company. Shawe was allowed to complete the buyout but has continued to dispute fees paid to a Chancery-appointed custodian who handled the matter.
While Chancery Court typically sides with CEOs in shareholder suits, the Tesla case was an exception that drew worldwide attention, given Musk’s high profile and reputation as a corporate mastermind. It also brought speculation that it would trigger an exodus of companies out of the state. Corporate law experts largely dismissed that speculation.
Musk is expected to press for Tesla to move its state of incorporation to Texas, which may trigger a shareholder suit similar to the one for TripAdvisor.
See the full decision below:
