Tesla chief Elon Musk wants to move the company’s incorporation, or registration, from the American state of Delaware to Texas. Musk said he will ask Tesla shareholders to vote on the move after a Delaware judge ruled against his 2018 pay deal valued at $55.8 billion. Never incorporate your company in the state of Delaware, Musk posted on social media service X shortly after the ruling. Tesla and many major companies, including Amazon, Google, Disney, and Walmart, keep their headquarters in other states. But they all register in the small eastern state of Delaware because of its tax laws and business courts. The financial publication Forbes reports that 68 percent of the top American businesses are incorporated in Delaware. Companies that are registered in Delaware do not pay corporate income tax if they do not do business in the state. Even if they do business in the state, companies can also avoid paying corporate tax by setting up what is called a “shell” company. A shell company legally owns property but does not carry out any business. Dan Coatsworth is an expert at AJ Bell, a British investment company. He told Reuters that Musk’s plan is the kind of behavior from someone “who always looks for an alternative if he can't get what he wants.” Musk's idea, should he go through with the vote, is not without risk. Legal experts said investors might take legal action if he tried to move the state of incorporation to Texas. Legal action is even more likely if it was seen as a move to get his pay deal rather than to help Tesla.
