Tripadvisor can reincorporate in Nevada, Delaware judge says, but can still face shareholder lawsuit
Tripadvisor Inc. can move its incorporation from Delaware to Nevada, a judge said Tuesday, but shareholders will be allowed to seek damages from the move.
Delaware Chancery Court Judge J. Travis Laster declined to block the company’s move, but also denied Tripadvisor’s
TRIP,
motion to dismiss a lawsuit brought last year by shareholders claiming a move would be unfair to investors because of less-stringent corporate standards in Nevada.
That suit had hoped to persuade the Delaware Chancery Court to stop the online travel company from going ahead with board-approved plans to reincorporate in Nevada.
Laster said in his ruling Tuesday that while the Delaware Chancery Court has the authority to block such moves, it was not warranted in this case. But he added that shareholders could still seek damages if the move hurts the company’s stock.
The case has gained new notoriety after Tesla Inc.
TSLA,
Chief Executive Elon Musk threatened to move the EV maker’s incorporation from Delaware to Texas, after the Delaware Chancery Court voided his $56 billion compensation package earlier this year.
Musk had cited the Tripadvisor case as an example of Delaware’s overreach, and he tweeted last week that companies should leave Delaware “before they lock the doors, as they just did with Tripadvisor.”
Musk has already moved two of his companies, X and Neuralink, out of Delaware and has filed to move out SpaceX as well.
Tripadvisor did not immediately respond to a request for comment.
Shares of the company are up about 25% year to date, compared to the S&P 500’s
SPX
22% gain this year.
