Will The First State No Longer Be First?
Yesterday, another Delaware corporation, Aerovate Therapeutics, Inc., filed a Form S-4 registration statement that includes a proposal to reincorporate from Delaware to Nevada. The proposal is unfortunately titled "The Redomestication Proposal" even though the company is seeking approval for a conversion rather than a domestication under Nevada and Delaware law. See Converting A Corporation Is Not Domestication. Given that Aerovate is proposing a conversion, and not a domestication, transaction, it is surprising to see that the proxy statement/prospectus uses the term "redomestication" some 174 times while referring to a "plan of conversion" only 31 times.
The reasons for the move are consistent with those given by other emigrants from Delaware:
The Aerovate and Jade boards of directors believe that there are several reasons why the Nevada Redomestication is in the best interests of Aerovate and Aerovate’s stockholders. First, the Nevada Redomestication will eliminate the Combined Company’s obligation to pay the annual Delaware franchise tax, which Aerovate and Jade expect will result in substantial savings to the Combined Company over the long term. In addition, the Nevada Redomestication may help the Combined Company attract and retain qualified management by reducing the risk of lawsuits being filed against the Combined Company and its directors and officers. Aerovate and Jade believe that for the reasons described in this proxy statement/prospectus, in general, Nevada law will provide greater protection to the Combined Company and its directors and officers than Delaware law. The Aerovate board of directors believes that the Nevada Redomestication will give the Combined Company more flexibility and predictability in various corporation transactions.
It is still early in the proxy season and it remains to be seen the extent to which other Delaware corporations decide to convert into Nevada corporations.
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