A bill in Delaware has raised concerns among critics, including institutional investors and asset managers, who believe it will lower corporate governance standards and limit shareholder rights. The bill, which passed the state Senate unanimously last week, has sparked controversy following a ruling invalidating Elon Musk’s compensation package from Tesla. Musk has since moved Tesla’s corporate listing to Texas, prompting other companies like Meta Platforms and DropBox to consider similar moves. The bill gives corporations more protections in conflict-of-interest cases and limits the documents they must produce in court cases. Supporters claim the bill will address corporate unrest in Delaware, while critics argue it could harm shareholder rights and corporate accountability. The bill’s impact is significant for Delaware, where approximately one-third of the state’s revenue comes from corporate fees and tax revenues. The state’s economy relies on corporate presence, with Wilmington serving as a hub for the legal industry. The bill is expected to face legal challenges and potential backlash from institutional investors.
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