Elon Musk's brain implant company, Neuralink Corp., relocated its business incorporation from Delaware to Nevada, which offers more protections for executives against investor suits, to distance itself from a state where Musk faced legal challenges, including issues regarding pay and the acquisition of Twitter.
Series of Setbacks in Delaware
In a notice to shareholders, the company completed the move on Thursday, following several legal setbacks for Musk in "The First State," including a judge invalidating his $55 billion pay package as CEO of Tesla.
Relocating Neralink Incorporation From Delaware to Nevada
Musk promptly expressed his thoughts about the decisions in a series of posts on X, previously known as Twitter, saying, "Never incorporate your company in the state of Delaware," and recommended Nevada or Texas if shareholders want to decide matters. Musk has also signaled plans to reincorporate Tesla, once again relocating the company away from Delaware.
A Public Vote Supporting the Relocation
Musk posted a poll on his X profile after the ruling invalidated his $55 billion payout plan, asking if the company should relocate its incorporation to Texas.
Tesla, based in Austin, was originally incorporated in Delaware in 2003. Last week, Musk promised to attempt moving Tesla's incorporation from Delaware to Texas, though this would need approval through a shareholder vote.
After the results revealed that 87.1% of respondents favored the move to Texas, he wrote that the public vote decisively supported the state, stating, "Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas."
Legal Battles in Delaware
Musk has had numerous legal battles in Delaware, known as the U.S. incorporation hub with 1.3 million legal entities, where more than 70% of Fortune 500 companies are incorporated. The state's chancery court judges are renowned for their expertise in business law and can expedite cases. Delaware is often chosen for resolving major merger and acquisition disputes, even by foreign companies.
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Large businesses are drawn to the state due to established legal precedents, access to skilled corporate lawyers, and the state's corporate law statute, which provides "predictability and stability."
Two years ago, a Delaware judge dismissed an investor lawsuit against Musk's $2.6 billion purchase of SolarCity, stating that Musk didn't coerce other directors into accepting an overpriced buyout of the renewable power provider.
Later in 2022, Musk faced difficulties when attempting to withdraw his bid to purchase the social media platform formerly known as Twitter. He encountered setbacks in pretrial rulings by Judge Kathaleen St. Jude McCormick, the same judge who later invalidated his 2018 pay plan.
Neuralink's Successful Brain Implant
Neuralink conducted its initial human brain implant in January, and according to Musk, the patient is recovering satisfactorily. The company's first objective is to enable people to control a computer keyboard or cursor using their thoughts.
