Media Mentions
Schulte partner Ele Klein talks Tesla with The Deal
February 16, 2024
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.
Providing insight into possible board action, Ele stated, “If the Tesla board grants Musk supervoting shares, it will likely seek to address some of the disclosure-related concerns raised by the Delaware Court of Chancery in an effort to avoid further litigation, regardless of whether Tesla is incorporated in Delaware or Texas at the time.
“Undoubtedly the board ... will go to the next level to address the concerns by taking steps such as setting up a special committee with independent legal and financial advisers to produce a fairness opinion about the value of the issuance, to bolster their case and also make sure the disclosure is more robust to try to avoid what happened in Delaware with the options grant,” he explained.
Read the article here.
Related Insights
Alerts
The Federal Trade Commission (“FTC”) passed its long-anticipated final Non-Compete Rule broadly prohibiting the use of worker non-competition restrictions. The Non-Compete Rule is scheduled to be published in the Federal Register on May 7, 2024, and become effective 120 days later, on Sept. 4, 2024. To the extent the Non-Compete Rule is more restrictive than a state or local law, the Non-Compete Rule will supersede such other law. However, the validity of the Non-Compete Rule is already being challenged in three separate court cases and its effective date may be delayed.
Alerts
On Feb. 16, 2024, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the United States Department of the Treasury (“Treasury”), issued a notice of proposed rulemaking (“Proposed Rule”)[1] continuing the process of implementing regulations to combat illicit finance risks posed by abuse by some in the real estate market. The Proposed Rule would require certain persons involved in residential real estate closings and settlements to submit reports (“Real Estate Reports”) and keep accurate records of certain non-financed transfers of US residential real property. The reasoning behind the Proposed Rule is explained extensively in FinCEN’s December 2021 Anti-Money Laundering Regulations for Real Estate Transactions Advanced Notice of Proposed Rulemaking, which discusses “the opacity of shell companies or other legal entity structures to mask true beneficial ownership of a property and their involvement in real estate transactions.”[2]
Alerts
The Federal Trade Commission (“FTC”) passed its long-anticipated final Non-Compete Rule broadly prohibiting the use of worker non-competition restrictions. The Non-Compete Rule is scheduled to be published in the Federal Register on May 7, 2024, and become effective 120 days later, on Sept. 4, 2024. To the extent the Non-Compete Rule is more restrictive than a state or local law, the Non-Compete Rule will supersede such other law. However, the validity of the Non-Compete Rule is already being challenged in three separate court cases and its effective date may be delayed.
Alerts
On Feb. 16, 2024, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the United States Department of the Treasury (“Treasury”), issued a notice of proposed rulemaking (“Proposed Rule”)[1] continuing the process of implementing regulations to combat illicit finance risks posed by abuse by some in the real estate market. The Proposed Rule would require certain persons involved in residential real estate closings and settlements to submit reports (“Real Estate Reports”) and keep accurate records of certain non-financed transfers of US residential real property. The reasoning behind the Proposed Rule is explained extensively in FinCEN’s December 2021 Anti-Money Laundering Regulations for Real Estate Transactions Advanced Notice of Proposed Rulemaking, which discusses “the opacity of shell companies or other legal entity structures to mask true beneficial ownership of a property and their involvement in real estate transactions.”[2]
Alerts
The Federal Trade Commission (“FTC”) passed its long-anticipated final Non-Compete Rule broadly prohibiting the use of worker non-competition restrictions. The Non-Compete Rule is scheduled to be published in the Federal Register on May 7, 2024, and become effective 120 days later, on Sept. 4, 2024. To the extent the Non-Compete Rule is more restrictive than a state or local law, the Non-Compete Rule will supersede such other law. However, the validity of the Non-Compete Rule is already being challenged in three separate court cases and its effective date may be delayed.