The US state of Delaware is reconsidering its strict corporate governance laws, amid concerns that they may be driving large companies out of the state. The changes could have significant implications for businesses and investors alike.
Delaware’s business-friendly reputation has made it a popular destination for multinational corporations, with many major firms incorporated in the state due to its favorable tax and regulatory environment. However, some critics argue that the state’s strict corporate governance laws, particularly those related to executive compensation and shareholder activism, are becoming overly burdensome.
In response to growing pressure from companies and industry groups, Delaware lawmakers have announced plans to relax certain provisions of the state’s corporate code. The changes would aim to reduce regulatory costs for businesses while maintaining some safeguards to protect minority shareholders.
The move is seen as a bid to retain large corporations that have been threatening to leave the state in recent years. In 2020, several major companies, including Amazon and General Electric, announced plans to relocate their headquarters from Delaware due to concerns over the state’s governance laws. While these threats have not yet materialized, the prospect of corporate exodus remains a concern for lawmakers.
Source: https://www.ft.com/content/29ae4126-7263-47e7-bd2e-c79ad41d930d