Document Type
Article
Publication Date
Spring 2025
Abstract
The differences between Nevada and Delaware corporate law - which I call "Nevadaware divergence" - are the subject of media attention, scholarly critique, and current litigation. Nevada corporate law has a reputation as being a no-liability Zone where officers and directors are free to defraud stockholders without consequences. My goal in this article is to inform a more fulsome understanding of Nevada corporate law, both substantively and theoretically, as compared to Delaware corporate law). Starting with the premise that Nevada corporate law is more nuanced than common wisdom suggests, I highlight Nevadaware divergence - not only about substantive corporate law-but also about each state's balance of the competing policies underlying corporate law. I explore the ebb and flow of the relationship between Nevada and Delaware corporate law, from the days of copycat-ism to the current era of Nevadaware divergence, and I deeply analyze three areas in which Nevada and Delaware corporate law' diverge: exculpation, appraisal, and freeze-out mergers. Based on my analysis, I assert several new perspectives about Nevadaware divergence on substantive corporate law', including the controversial argument that breaches of the duty to act in good faith are not exculpated in Nevada. Drawing from Nevada and Delaware's different choices about the appropriate balance of the competing polices underlying corporate law, I also offer a broader perspective on the policies underpinning Nevada corporate law. In short, across the board, Nevada- to a greater degree than Delaware- prioritizes the policy goals of minimizing the negative impacts of potential monetary liability on officers and directors (such as disincentivizing qualified individuals from serving or making risky decisions) over the competing policy goals of deterring breaches of fiduciary duty, compensating stockholders and corporations for fiduciaries' breaches, and incentivizing minority stockholder protections.
Recommended Citation
Wendy Gerwick Couture, Nevadaware Divergence in Corporate Law, 19 VA. L. & BUS. REV. 145 (Spring 2025).