A contentious bill aiming to protect Delaware’s business incorporation franchise system has passed the state Senate with no debate, sparking concerns among critics that it will make it easier for large corporations and billionaires to exploit loopholes in the existing law.
The legislation, which defines a “controlling shareholder” within a company as someone who owns at least half of the shares or holds a managerial role, was introduced after billionaire Elon Musk yanked Tesla and SpaceX out of the state last year. However, critics argue that the bill is too vague and has been rushed through the process.
Lawyers testifying in committee hearings have warned that the changes will make it harder for smaller companies to navigate complex corporate disputes, allowing powerful executives to take advantage of loopholes and gain greater control over their businesses.
The bill’s supporters claim that it is necessary to ensure clarity and predictability in Delaware’s corporate franchise system, but critics argue that it will only benefit large corporations and billionaires at the expense of ordinary investors and pensioners.
The legislation now moves to the House for consideration, with opponents expressing concerns that it will undermine the state’s reputation as a trusted hub for corporate governance.
Source: https://whyy.org/articles/delaware-corporate-law-franchise-legislation