Last week, Chromocell Therapeutics Corporation filed preliminary proxy materials that included a proposal to reincorporate in Nevada. Rather than convert, the company is proposing to effect the reincorporation by means of a merger with and into a wholly-owned subsidiary of the Company. The proposal also contemplates a simultaneous name change to “Channel Therapeutics Corporation”. The company's common stock is listed on The NYSE American LLC stock exchange. Chromocell's preliminary proxy materials provide a number of reasons for reincorporation, including a belief that doing so will increase the marketability of its securities:
We believe that the Reincorporation Merger will greatly reduce our overall tax burden given the franchise taxes imposed on Delaware corporations. We also believe that our reincorporation in Nevada will also give us a greater measure of flexibility and simplicity in corporate governance than is available under Delaware law and will increase the marketability of our securities. Chapter 78 of the Nevada Revised Statutes (the “NRS”) is generally recognized as one of the most comprehensive and progressive state corporate statutes. By reincorporating the Company in Nevada, we believe that the Company will be better suited to take advantage of business opportunities as they arise and grow its business and that Nevada law can better provide for its ever-changing business needs and lowers its ongoing administrative expenses.
All may not be gloom and doom for Delaware, however. I previously noted that another Delaware corporation, Sonoma Pharmaceuticals, Inc., was seeking stockholder approval for a move to Nevada. Late last month, however, the company reported that the proposal had failed to win approval.
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