Elon Musk is to shift the incorporation of SpaceX from Delaware to Texas, seeking to further limit exposure to the state after a judge there shot down his $56 billion (€52.2 billion) pay package from Tesla last month.
Musk, the world’s richest man, switched the incorporation of his brain-implant company Neuralink from Delaware to Nevada last week. SpaceX is a far larger business – a valuation of almost $200 billion makes it one of the most valuable private companies in the world.
“If your company is still incorporated in Delaware, I recommend moving to another state as soon as possible,” Musk wrote on X (formerly Twitter) on Wednesday.
SpaceX, whose corporate headquarters are in southern California, is the latest of Musk’s half-dozen companies planning to split from Delaware, the small eastern state that has long been the favoured domicile for large corporations thanks in part to a transparent corporate law regime, years of legal precedent and a community of lawyers.
The moves come after a judge in Delaware, Kathaleen McCormick, voided a planned $56 billion pay award from Tesla, the electric-car company he runs, late last month. McCormick ruled that Musk had exerted undue control over the company’s board despite owning a minority of Tesla. He was the “paradigmatic ‘Superstar CEO’”, she wrote in the ruling.
Following McCormick’s decision, Musk said other founders should incorporate their companies “in Nevada or Texas if you prefer shareholders to decide matters” in a post on X, the social media platform which he also owns. Musk has also pledged to hold a vote for Tesla shareholders on switching the carmaker’s incorporation to Texas, a process that is likely to be more complex given Tesla is a public company.
Texas has recently sought to position itself as a rival to Delaware’s business-friendly reputation. The state passed legislation signed by the governor to create a new Texas business court that will hear corporate disputes with specialised judges. Officials in the state have been actively marketing the new court to companies domiciled elsewhere as sophisticated and efficient even as the details of the body and how it will operate are still being finalised.
Two other Musk companies – X and xAI, the artificial intelligence start-up for which he is seeking to raise billions of dollars – are incorporated in Nevada.
SpaceX’s move was first reported by Bloomberg News. – Copyright The Financial Times Limited 2024
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