AP7, Sweden's premium pension fund default provider, has urged the Delaware General Assembly to reject a proposal for extensive changes to the state's corporate law.

A recently introduced bill proposes significant changes to how corporate governance and shareholder rights are addressed in Delaware.

The proposed changes aim to revise the state's corporate laws to provide greater protection for corporate executives who also hold controlling interests in their companies.

The legislation is a response to major companies completing or starting the process of reincorporating in other states, including Tesla, social media platform X (formerly Twitter), cloud-sharing platform Dropbox, and Tripadvisor.

However, according to AP7, legislation that grants controlling shareholders and corporate executives immunity from liability risks encouraging reckless decision-making, eroding corporate governance standards, and jeopardising long-term shareholder value.

AP7 said this would have significant consequences for American companies, as nearly two-thirds of all publicly traded companies in the United States have their legal domicile in Delaware and are subject to Delaware corporate laws.

Meta — the parent company of Facebook, Instagram and WhatsApp — has been in talks of moving its corporation to Texas and Bill Ackman, the billionaire CEO of
Pershing Square Capital Management, has announced plans to move its management company out of Delaware to reincorporate in Nevada.

AP7, a capital owner with large investments in the US, stressed that it takes the bill's consequences seriously.

It said the bill risks damaging investor protection and undermining shareholders' rights to corporate governance in Delaware, particularly protection against conflicts of interest, transparency in corporate governance and minority shareholder rights in legal proceedings.

The bill has already passed the first two legislative hurdles in the General Assembly.

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