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ARTICLE · 26 FEBRUARY 2024

Delaware Complicates Musk Quest For Control

McDermott Will & Schulte
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A Tesla move to Texas and an increase in Musk's voting rights would require board and shareholder approval, processes that would need to be strategically managed.

United StatesCorporate/Commercial Law
Ele Klein
Ele Klein
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In the wake of a Delaware ruling rescinding Elon Musk's pay package at Telsa Inc. and a possible reincorporation of Tesla from Delaware to Texas, Schulte Partner Ele Klein weighed in on how these matters could play out in The Deal article, "Delaware Complicates Musk Quest for Control."

A Tesla move to Texas and an increase in Musk's voting rights would require board and shareholder approval, processes that would need to be strategically managed.

Ele explained, "If shareholders approve a properly disclosed reincorporation, it would be hard for a shareholder to sue and convince a court to block a move to Texas.

"Most likely, it would require a charter amendment and shareholder vote to approve the creation of some sort of supervoting shares for Musk, or a structure that converts some of his existing equity stake into multiple voting shares," he added.

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