Tesla is one step away from incorporating its business to Texas

(Credit: Jeff Roberts)

Following the rescindment of CEO Elon Musk’s pay package, Tesla is considering moving its incorporation status from Delaware to Texas, and it is just one step away from doing so.

Earlier this week, we covered Musk’s pay package and how a Shareholder who challenged it in court won based on Delaware Chancery Court Judge Kathaleen McCormick’s opinion that the “unfathomable sum” of money awarded was unjust and unfair to the company’s investors.

There have been a lot of different perspectives on the decision, but following the news, Musk immediately stated that companies should not incorporate their businesses in Delaware.

It now seems he has one foot out the door.

Tesla could incorporate into Texas

Musk posted a poll to X on Tuesday asking if Tesla should change its State of Incorporation to Texas, where its headquarters is located. After 1.1 million votes, 87.1 percent of respondents said yes.

The Tesla CEO also said after the poll was complete that it would “immediately” hold a shareholder vote to transfer its State of Incorporation from Delaware to Texas. Based on the vote on X, it will be voted by Tesla shareholders that the company should move to Texas.

Why did Tesla incorporate in Delaware?

Tesla, along with many other large companies, are incorporated in Delaware for several reasons, including tax reasons and privacy.

According to LegalZoom, the advantages of incorporating a business in Delaware include:

  • Tax benefits
  • Corporation court, which helps encourage more predictable outcomes
  • Quickly processed filings
  • Privacy
  • Residency is not required
  • Slimmed-down corporate structure
  • Angel investors or Venture Capitalists prefer Delaware incorporation

I’d love to hear from you! If you have any comments, concerns, or questions, please email me at joey@teslarati.com. You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.

Joey Klender: Joey has been a journalist covering electric mobility at TESLARATI since August 2019. In his time at TESLARATI, Joey has broken several big stories, including the first images of the Tesla Model S Plaid, the imminent release of the 4680 Model Y through EPA certification, and several expansions to the Lucid AMP-1 factory in Arizona, to name a few. His stories have been featured in several publications, including Yahoo! Finance, Fox News, CNET, and Seeking Alpha. In his spare time, Joey is playing golf, watching MMA, or cheering on any of his favorite sports teams, including the Baltimore Ravens and Orioles, Miami Heat, Washington Capitals, and Penn State Nittany Lions. You can get in touch with joey at joey@teslarati.com. He is also on Twitter @KlenderJoey.
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