Well over half of Fortune 500 companies are incorporated in Delaware, owing to its business-friendly reputation and its Court of Chancery-a respected authority on corporate law, with well-developed and predictable case law that gives investors confidence. Beyond being the most common state of incorporation, Delaware is where shareholder rights are most frequently tested, with hundreds of fiduciary duty suits litigated annually in its Court of Chancery As a result, Delaware produces a body of precedent that sets the standard nationally concerning shareholder litigation and directly affects investors in U.S. public companies. For European institutional investors holding billions in U.S. equities, this means Delaware litigation has historically been the most reliable avenue to secure recoveries and governance reforms.

Texas and Nevada have recently challenged Delaware’s supremacy, enacting enhanced officer and director protections laws, often at the expense of shareholder oversight. In response, Delaware has likewise revised its statutes. These statutory changes are recalibrating the balance between boards and shareholders. For institutional investors, the risk is facing higher hurdles in detecting and remedying misconduct. Protections long taken for granted-such as meaningful access to records, independent board oversight, and accountability for breaches of fiduciary duty—may erode, raising the potential for unchecked conflicts of interest and corporate wrongdoing. Because the relationship between shareholders and corporations is governed by the law of the state of incorporation, this article examines key developments in Texas, Nevada, and Delaware.

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