As big companies look to leave Delaware, Nevada is trying to reel them in

When a top Nevada official promoted the state as a home for corporate filings last year, he cited a few firms that wanted in.

Secretary of State Francisco Aguilar wrote in an opinion piece in The Wall Street Journal that Fidelity National Financial and Cannae Holdings were looking to incorporate in Nevada. They wanted to shift from Delaware, and Aguilar and his co-author, UNLV law professor Ben Edwards, argued other firms should look west as well.

“Delaware isn’t happy that public companies are fleeing its litigation-heavy business environment to incorporate in friendlier states like Nevada,” the authors wrote.

They didn’t mention, however, that the two firms they cited already had strong ties to Nevada, including prominent figures in Las Vegas.

Fidelity National’s longtime chairman is Golden Knights owner Bill Foley, and its other board members include Raiders President Sandra Douglass Morgan, former chairwoman of the Nevada Gaming Control Board. The Florida-based company also has several members of its senior management in Las Vegas.

Cannae, a split-off from Fidelity, is based in Las Vegas and led by Foley, its chairman, CEO and chief investment officer.

In securities filings, the two companies cited several reasons for wanting to incorporate in Nevada, including cost savings and reduced risk of litigation. They also noted their chairman lives in Las Vegas.

‘Can’t mention everything’

Edwards said in an interview that the focus of their piece was a national issue and that the companies they mentioned are significant. Fidelity National had a stock-market value of $17.8 billion as of March 14, while Cannae was valued at more than $1 billion.

“They could pick any state in the country, and they picked Nevada, and I think that’s wonderful,” Edwards.

He also said that the companies’ Nevada connections are well known; that this information is detailed in their corporate filings, which the opinion piece had links to; and that the authors only had so much space to write.

“You simply can’t mention everything in an op-ed,” Edwards said.

Aguilar’s office did not respond to requests for comment.

Nevada has long generated huge windfalls of revenue from its casino industry. But it also hauls in cash from the less-flashy field of business incorporations, generating around $183 million in revenue from new registrations and other business-entity fees in 2023, according to Aguilar’s office.

Nevada offers financial and legal protection for executives and layers of secrecy for ownership, companies have explained. Business owners don’t have to live here to incorporate in Nevada, nor does their company need to be here either.

Delaware has long led the pack nationally for drawing out-of-state entities, especially publicly traded companies. But lately, Nevada has been siphoning business.

Minimal disclosure requirements

Travel site Tripadvisor sought to move its incorporation here from Delaware, saying in a securities filing that Nevada law allows a “broader exclusion of individual liability” of a company’s officers, directors and stockholders.

There are also “minimal reporting and corporate disclosure requirements” under Nevada law, and shareholders’ identities are not a matter of public record, according to Applied UV, a disinfectant seller that reincorporated from Delaware to Nevada in 2023.

Tech firm Dropbox recently unveiled plans to make the same move, and hedge-fund magnate Bill Ackman also said he was looking to reincorporate his management company in Nevada, though he later said he was also eyeing Texas.

Delaware, which generates more than $1 billion in revenue annually from corporate franchise taxes, is trying to find ways to keep businesses happy.

Gov. Matt Meyer recently said in a Bloomberg Law news story that he was weighing changes to the way business disputes are handled in his state, based on feedback from executives, corporate lawyers and others.

Delaware legislators also recently proposed changes to the state’s corporate law that would limit shareholder lawsuits, Reuters reported.

‘Legal shenanigans’

In their piece for the Journal, which was published last June, Aguilar and Edwards wrote that after Tripadvisor unveiled plans to shift its incorporation, lawyers in Delaware sued to block the move.

As the authors noted, the state of Nevada filed court papers to support allowing Tripadvisor and other firms to “move between states without being hauled into court or charged a fee on the way out the door.”

These kinds of “legal shenanigans are a big reason why” other publicly traded companies announced plans to reincorporate in Nevada, they argued.

The authors then brought up Cannae and Fidelity National and provided some reasons the companies gave in securities filings for wanting to incorporate in the Silver State.

Cannae stated there has been an “increased risk of opportunistic litigation” for Delaware-registered public companies, making that state “a less attractive place” for incorporation. The firm also would pay only $700 in annual business filing fees in Nevada, compared to $255,000 in Delaware, the authors wrote.

Fidelity National reported that Delaware’s approach to corporate law “may discourage pursuit of transactions” the company might otherwise be interested in, the authors noted.

In their securities filings, the companies also cited strong connections to Las Vegas that weren’t mentioned in the opinion piece.

The companies did not respond to requests for comment.

‘A smart investment’

Fidelity National, a real estate transaction-services firm, issues title-insurance policies and handles escrow accounts.

The company reported that its Western regional headquarters are in Las Vegas and that most of its board meetings have been held here. Several members of its senior management team are based here, and three of its board members, including the chairman, live in Las Vegas.

It also said that it rents office space in Cannae’s corporate headquarters, an office building off Town Center Drive and Summerlin Parkway.

Cannae, an investment firm that buys stakes in operating companies, was split off from Fidelity in 2017. It said in a securities filing last year that substantially all of its corporate operations are in Las Vegas.

Cannae has since incorporated in Nevada, records show. Fidelity National, however, did not secure enough shareholder approval last year to make the switch, according to a securities filing.

Nonetheless, the Delaware Supreme Court recently issued a decision that “could make it easier for companies to leave the state and reincorporate elsewhere,” Aguilar’s office said in a news release last month.

“Nevada is proving itself as a smart investment for businesses,” he said, adding there are “more and more reasons to incorporate here.”

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342.