Hedge fund, tech firm look to reincorporate in Nevada
Two more companies are looking to reincorporate in Nevada as the state siphons business from Delaware, the long-reigning heavyweight for such out-of-state paperwork.
File-sharing service Dropbox unveiled plans Jan. 31 to move its incorporation from Delaware to Nevada. The San Francisco-based tech firm said in a securities filing that it’s in a transformational period and would likely be better served by the Silver State’s “business-oriented legal environment.”
Among other things, the company said that Nevada’s “statute-focused approach to corporate law” is likely to foster “more predictability” than Delaware’s approach.
Then the next day, New York hedge-fund operator Bill Ackman responded to a post on X about so-called activist judges by writing: “We are reincorporating our management company in Nevada for the same reason. Top law firms are recommending Nevada and Texas over Delaware.”
Ackman, the billionaire founder of Pershing Square Capital Management, wrote in a subsequent post that his company had not made a final decision and was also considering Texas.
Still, he’s no stranger to Nevada. His firm is the largest shareholder in Summerlin developer Howard Hughes Holdings and proposed a $1 billion deal last month to buy out the company’s other stockholders.
Summerlin is Las Vegas’ largest master-planned community, spanning 22,500 acres and boasting more than 120,000 residents.
Protections and secrecy
Nevada has long generated huge windfalls of revenue from its casino industry, but the state also hauls in cash from the decidedly less-flashy industry of business incorporations.
The state offers financial and legal protection for executives and layers of secrecy for ownership, companies have said. Business owners don’t have to live here to incorporate in Nevada, nor does their company need to actually be here either.
Overall, Nevada generated about $183 million in revenue from new registrations and other business-entity fees in 2023, according to Nevada Secretary of State Francisco Aguilar’s office.
Delaware has long led the pack nationally for drawing out-of-state entities, especially among publicly traded companies. But Nevada law allows a “broader exclusion of individual liability” of a company’s officers, directors and stockholders, according to a securities filing by travel site Tripadvisor, which was seeking to move its incorporation here from Delaware.
Under Nevada law, there are also “minimal reporting and corporate disclosure requirements,” and shareholders’ identities are not a matter of public record, according to a securities filing by Applied UV, a disinfectant seller that reincorporated from Delaware to Nevada in 2023.
Delaware Gov. Matt Meyer recently said in a Bloomberg Law news story that he was weighing changes to the way business disputes are handled in his state, based on feedback from executives, corporate lawyers and others.
“My role as governor is to look at the system, make sure the corporate law is fair, make sure it’s predictable, make sure it’s clear and consistent, and make sure we’re making whatever changes are necessary,” the governor said.
Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342.
