Musk's Tesla To Hold Shareholder Vote On Moving Incorporation To Texas

(RTTNews) - Tesla (TSLA) CEO Elon Musk said on Thursday that he will hold a shareholder vote to change the company's incorporation from Delaware to Texas.

Earlier, Musk had asked his followers on X, formerly Twitter, on whether the EV maker should change its state of incorporation to Texas. Around 87.1 percent of a total 1.1 million respondents voted in favor of Musk's proposal.

Announcing the final decision, Musk posted, "The public vote is unequivocally in favor of Texas! Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas."

The announcement reflects the setback Musk faced when Chancery Court Chancellor Kathaleen McCormick voided the Tesla CEO's pay package of around $56 billion, citing that the company's board failed to prove that Musk's pay package was fair or even present evidence that a negotiation with Musk had taken place regarding the package.

Responding to the ruling, Musk posted, "Never incorporate your company in the state of Delaware". He added, "I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters."

Delaware is home to more than 65 percent of Fortune 500 companies, mainly due to the state's business-friendly legal framework and tax policies, according to Harvard Business Services.

According to a Reuters report, legal experts warned that Musk's move could invite lawsuits from investors as the move is for his gain rather than for the benefit of Tesla.

In 2021, Tesla moved its corporate offices from Palo Alto, California, to Austin, Texas, due to issues with the state's regulations as well as clashes with health officials regarding the opening of the Fremont facility, Reuters reported.