Delaware Governor Holds Urgent Talks as Meta Considers Reincorporation

Delaware Governor Holds Urgent Talks as Meta Considers Reincorporation

Meta’s potential move to exit Delaware and reincorporate in another state has sent shockwaves through the corporate and political landscape, prompting emergency weekend meetings led by Governor Matt Meyer. The concerns over Meta’s departure come at a time when Delaware lawmakers are pushing for controversial corporate law reforms, further fueling speculation about a “DExit” movement—where major corporations reconsider their incorporation in the state.

 

---

Why is Delaware Concerned?

Delaware’s Reliance on Corporate Tax Revenue

• Delaware has long been the top U.S. state for corporate incorporations due to its business-friendly laws and experienced judiciary.
• Over 20% of the state’s tax revenue—more than $1 billion annually—comes from corporate franchise fees.
• A mass exodus of major corporations like Meta could have serious financial consequences for the state.

Governor’s Emergency Meetings

• After reports surfaced on January 31 about Meta’s potential departure, Governor Meyer immediately convened online meetings with top corporate attorneys and state legislators.
• Key attendees included lawyers representing Meta, Tesla, and other major corporations, as well as former Delaware judiciary officials.
• The main topic of discussion was how to retain major corporations and prevent further defections.

---

Legislation That Could Impact Meta’s Decision

Senate Bill 21 (SB 21) and Its Controversial Changes

• Just two weeks after Meta’s potential exit was reported, Delaware lawmakers introduced SB 21, a bill aimed at overhauling corporate law in ways that could favor powerful CEOs like Mark Zuckerberg and Elon Musk.

• If enacted, SB 21 would: Limit the ability of courts to scrutinize corporate deals.
  Restrict shareholder access to corporate records when investigating fiduciary violations.
  Make it harder for investors to sue executives over corporate mismanagement.

• SB 21 has already passed the state Senate and is awaiting a vote in the House of Representatives before being sent to the governor.

• If approved, the law would weaken shareholder protections and potentially shield executives from lawsuits related to past company decisions.

---

Meta’s Legal Troubles in Delaware

Ongoing Investigations & Lawsuits

• Meta has been facing shareholder investigations in Delaware courts, with claims that Zuckerberg and other executives may have caused billions in damages.
• If SB 21 becomes law, any new shareholder lawsuits filed after February 17 would be evaluated under the new, more CEO-friendly legal framework.
• This could dramatically weaken investor protections, potentially influencing Meta’s decision on whether to stay in Delaware or leave.

Meta’s Silence on the Issue

• While Meta has not publicly confirmed plans to reincorporate elsewhere, insiders suggest that the timing of the legislative changes could be an attempt to keep the company in Delaware by providing a more favorable legal environment.

---

Political Factors at Play

Elon Musk’s Influence & Trump’s Role

• Elon Musk’s high-profile departure from Delaware in 2024, after a judge invalidated his $56 billion Tesla pay package, fueled the “DExit” movement.
• Musk has since moved Tesla’s incorporation to Texas and publicly attacked Delaware’s legal system.
• As a top donor and adviser to President Donald Trump, Musk now heads the Department of Government Efficiency (DOGE) in the Trump administration.

Zuckerberg’s Changing Relationship with Trump

• During Trump’s first term, Zuckerberg had a rocky relationship with the administration.
• However, in recent months, he has taken steps to align Meta more closely with Trump’s policies, including:
  Eliminating Diversity, Equity, and Inclusion (DEI) programs at Meta.
  Scrapping third-party fact-checking programs in favor of a Community Notes system, similar to Musk’s X platform.
  Appointing Trump ally Dana White, UFC CEO, to Meta’s board.
• In January, Meta also agreed to pay $25 million to settle a lawsuit over Trump’s account suspension after the January 6 Capitol riot.

---

Corporate Backers & Critics of SB 21

Who Supports SB 21?

• The bill was co-written by law firms and former judges with ties to Musk and Meta.
• Supporters include corporate defense firms that argue the changes will enhance business-friendly laws in Delaware.

Who Opposes It?

• Shareholder advocacy groups such as CalPERS and ICGN strongly oppose the bill.
• Critics warn that it allows powerful executives to sidestep accountability and could erode investor confidence in Delaware’s corporate governance.

---

What’s Next?

House of Representatives Vote on SB 21

• The Delaware House is expected to vote on SB 21 this week.
• If passed, the bill will be sent to Governor Meyer for final approval.

Meta’s Next Move

• Meta has not confirmed whether it will reincorporate elsewhere, but the passage of SB 21 could impact its decision.
• If the bill fails, Meta may follow Tesla’s lead and move to a more CEO-friendly state like Texas or Florida.

Delaware’s Corporate Future at Stake

• The outcome of this battle could reshape Delaware’s status as the top state for corporate incorporation.
• If more companies follow Tesla’s lead, Delaware could lose billions in corporate tax revenue.

Stay tuned for updates as the situation unfolds!