As corporate governance continues to develop, Delaware, Texas, and Nevada are actively shaping their legal landscapes to attract and regulate business entities. Recent legislative changes highlight a growing divergence in how each state addresses corporate litigation and governance. What follows is an overview of key developments across major legal categories.
Kevin Roberts, CEO at Capitol Services, was invited by the Delaware Secretary of State’s office to participate on an industry panel that includes Deputy SOS Kristopher Knight at the Delaware Annual Executive Strategic Planning Conference in October to discuss the differences between the recent DE, TX, and NV business laws as each state attempts to ensure a business-friendly environment.
In the area of specialized business courts, Delaware remains steady, continuing to rely on its well-established Court of Chancery, with its expertise in complex corporate disputes. Texas has established the Texas Business Court, designed to streamline the handling of high-stakes commercial litigation. Meanwhile, Nevada is taking steps to modernize its judiciary by advancing a proposed constitutional amendment that would create a dedicated business court.
Delaware’s Court of Chancery, being a court of equity, inherently resolves internal corporate matters without jury trials. Texas has adopted a more explicit approach. Following the passage of Senate Bill 29, corporations are now permitted to waive jury trials in internal disputes through provisions in their certificate of formation or bylaws. Nevada has followed suit with Assembly Bill 239, which allows similar waivers through the articles of incorporation.
When it comes to safe harbors from liability, Delaware has introduced protections against equitable relief and monetary damages in transactions involving controlling stockholders (excluding going-private deals) and conflicted directors or officers. Texas has expanded its protections through Section 21.418 of the Texas Business Organizations Code (TBOC), shielding directors and officers even outside the formal safe harbor unless plaintiffs meet heightened breach-of-duty standards. Nevada’s AB 239 similarly establishes a safe harbor for controlling stockholders in specified contexts.
The business judgment rule remains a core principle in all three states, but with different nuances. Delaware’s common law version continues unchanged, preserving the presumption that directors act in the corporation’s best interests unless plaintiffs can prove otherwise. Texas has codified a version of the rule that aligns closely with Nevada’s approach, requiring plaintiffs to overcome the presumption of good faith by alleging fraud, misconduct, or knowing legal violations. Nevada’s statute maintains that a breach of fiduciary duty requires proof of intentional misconduct or fraud.
In terms of restructuring mergers involving wholly-owned subsidiaries, all three states now allow such mergers to proceed without stockholder approval under defined circumstances. Delaware authorizes this under Section 251(g) of the Delaware General Corporation Law (DGCL). Texas provides a similar mechanism through Section 10.005 of the TBOC. Nevada now allows the same restructuring pathway under AB 239.
For changes to authorized shares and reverse stock splits, Delaware permits certain actions with a simple majority vote under DGCL Section 242(d). Texas has simplified procedures through Senate Bill 2411, enabling boards to independently approve certain stock splits without shareholder votes. Nevada’s AB 239 aligns with Delaware’s approach, allowing approval by a majority of the affected class, rather than a majority of all voting power.
On the topic of waiving class-by-class voting, both Delaware and Texas allow corporations to include provisions in their certificate of formation that eliminate the need for separate class votes. Nevada currently does not offer a statutory mechanism for such waivers.
The definition and scope of controlling stockholder liability also vary. Delaware now provides a codified definition, identifying controlling stockholders based on voting control and managerial authority, and limits their fiduciary duties to breaches of loyalty and the receipt of improper benefits. Texas has not codified a definition and lacks clear judicial precedent, though it generally permits shareholders to act in their own interests. Nevada defines a controlling stockholder as one with voting power sufficient to elect a majority of directors and limits fiduciary duties to preventing undue influence that results in personal benefit.
With respect to judicial determinations of director independence, Texas stands out. Under SB 29, corporations can request an upfront court determination regarding the independence and disinterestedness of special committee members at the outset of litigation. Delaware and Nevada currently do not allow for such preliminary judicial findings.
In derivative lawsuits, Delaware and Nevada impose no minimum ownership thresholds for shareholders seeking to bring suit. Texas, however, allows corporations to impose thresholds of up to 3% ownership of outstanding common stock as a prerequisite for filing a derivative action.
Access to books and records has also seen notable restrictions. Delaware has narrowed inspection rights by limiting them to specific records and requiring shareholders to demonstrate a proper purpose and good faith. Texas imposes even stricter limitations, explicitly excluding access to emails, texts, and social media communications. It also requires shareholders to either hold at least 5% of shares or to have owned shares for a minimum of six months. Nevada links access rights to ownership thresholds, allowing inspection of stock ledgers at 5% ownership and broader access to books and financials at 15%.
Finally, shareholder proposal thresholds differ sharply. Texas has enacted SB 1057, allowing corporations to adopt minimum ownership thresholds based on either market value or percentage ownership for submitting shareholder proposals, outside of director nominations. Delaware and Nevada currently provide no specific statutory authorization for such thresholds.
In summary, Delaware, Texas, and Nevada are offering increasingly distinct models of corporate governance and litigation risk management. Delaware continues to refine its well-established legal infrastructure. Texas is rapidly developing a corporate-friendly statutory regime with forward-looking reforms. Nevada is now gradually modernizing its laws to stay competitive. For corporate counsel, directors, and shareholders, understanding the unique frameworks in these jurisdictions is essential for navigating today’s complex corporate legal environment.