Following the decision that validated The Trade Desk’s reincorporation from Delaware to Nevada back in November 2024, the judge overseeing the challenged reincorporation of Tesla from Delaware to Texas has ruled that Tesla’s reincorporation complied with the company’s charter and corporate law.
Similar to The Trade Desk litigation, the plaintiff in the Tesla suit alleged that Tesla’s charter required the affirmative vote of the holders of at least two-thirds of the voting power of all then-outstanding shares of Tesla’s capital stock to approve the transaction, and that Tesla failed to achieve this vote (receiving only 63% approval).
In her decision validating Tesla’s reincorporation, Chancellor Kathaleen St. Jude McCormick referred directly to The Trade Desk ruling, which found that a reincorporation does not constitute a charter amendment, even when it has the same practical effect, and is instead governed by § 266 of the Delaware General Corporation Law, which provides for conversions (i.e., reincorporations) by the affirmative vote of a majority of the shares of the then outstanding stock entitled to vote on the proposal.
