Prominent venture capitalist Chamath Palihapitiya has moved his recent business incorporations to Nevada citing concerns over Delaware’s judicial system and its impact on Tesla Inc. TSLA shareholders, marking a potential shift in corporate domicile preferences.
What Happened: In a statement on X, Palihapitiya revealed he has incorporated his last four companies in Nevada, stating, “Ever since the judicial activism against Tesla shareholders, I redirected the incorporation of the last four companies I’ve bought or started to Nevada.” He emphasized that “activism has a price and DE will pay it as fewer companies pick them.”
The former Facebook executive’s decision comes amid a broader corporate migration trend, with major companies reassessing their traditional ties to Delaware, long considered the gold standard for corporate law.
When questioned about his choice of Nevada over other business-friendly states like Wyoming or Texas, Palihapitiya cited Nevada’s pro-business environment, established legal precedents, and proximity to California.
Why It Matters: This shift in corporate domicile preferences parallels a larger exodus of companies from California to Texas. Chevron Corp. in August announced plans to relocate its headquarters from San Ramon to Houston by the end of 2024, ending a 144-year presence in California.
Other major corporations, including Tesla, Oracle Corp., and Charles Schwab Corp., have made similar moves to Texas.
Andy Walz, Chevron’s President of Americas Products, emphasized the practical motivations behind such relocations. “California is a tough place to do business,” Walz said, citing recruitment challenges and high living costs. “In Texas, we’re welcome. Our industry is welcome.”
According to CBRE Group Inc. CBRE, eight Fortune 500 companies departed California between 2018 and 2023, with ten choosing Texas as their new home, highlighting a significant shift in corporate America’s geographical preferences.
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