Shareholders at a small but growing number of companies will be voting on proposals to ditch Delaware or other states and incorporate in North Dakota. Oil giant Exxon Mobil Corp. ( XOM - news - people ), Continental Airlines Inc. ( CAL - news - people ) and Southwest Airlines Co. ( LUV - news - people ) are among the latest companies to announce that shareholders will vote on resolutions to make the switch. In most cases, management opposes the change.
Two years ago, lawmakers in North Dakota passed an incorporation law designed to be more shareholder-friendly than laws in Delaware, where most U.S. companies are incorporated. If companies trek to North Dakota, it could generate filing fees for the state and new work for lawyers in the capital of Bismarck.
The bolt-for-Bismarck bloc's most prominent supporter is Carl Icahn.
The billionaire investor asked Biogen Idec Inc. ( BIIB - news - people ) to reincorporate in North Dakota, and he wants shareholders to support his four challengers over the biotechnology company's candidates for the board. ...
UCLA law professor Stephen M. Bainbridge, who has written extensively on the North Dakota gambit, said it is doomed to fail.
Bainbridge said investors will prefer Delaware's director-friendly approach to the shareholder-first tack of North Dakota.
You can download my paper Why the North Dakota Publicly Traded Corporations Act Will Fail from SSRN.
