Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Elon Musk has shifted the incorporation of his brain-implant company Neuralink to Nevada, deepening a rift with the state of Delaware where a judge recently voided the entrepreneur’s $56bn pay package from Tesla.
The change from Delaware to Nevada was completed on Thursday, according to documents filed to the office of the Nevada secretary of state.
Musk’s move follows the decision by a judge in Delaware, Kathaleen McCormick, to void his unprecedented pay package late last month, which had been awarded to him by the board of Tesla on condition that he met ambitious growth targets.
After the decision Musk posted on X, the social media platform he owns: “Never incorporate your company in the state of Delaware.”
“I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters,” he added.
As well as Neuralink — which Musk recently claimed had successfully implanted an electrode into a human brain for the first time — a number of his other ventures are also incorporated in Nevada. Those include X and xAI, the artificial intelligence start-up for which Musk is raising money.
He has pledged to let shareholders vote on whether Tesla should shift its incorporation to Texas after the Delaware decision.
Delaware overwhelmingly remains the domicile of choice for large businesses, thanks largely to its stable and transparent corporate law regime. About two-thirds of the Fortune 500 are incorporated in the state. A hard-to-replicate combination of decades of legal precedent and an established legal community make the state attractive to corporations.
Nevada has become a popular venue for some public companies with a large controlling shareholder. The state tends to be more deferential to the decisions of boards with such large shareholders. TripAdvisor, controlled by Greg Maffei, recently has attempted to move from Delaware to Nevada.
However, just prior to making an initial public offering, many private companies will move to Delaware in order to placate large institutional investors such as mutual funds.
Musk’s decision to shift Neuralink’s incorporation from Delaware to Nevada was first reported by Bloomberg.
Read the full article here