Summer 2025 Corporate Communicator

Past Issues

Dear clients and friends,

In this issue of the Corporate Communicator, we summarize recent significant amendments to the Nevada Revised Statutes in response to the ongoing discourse among boards of directors, management, and investors about whether Delaware remains a preferred corporate domicile for existing and new corporations, limited liability companies, and other entities.   

Very truly yours,

Jeffrey E. Beck and Eileen Vernon, Editors

Snell & Wilmer Corporate & Securities Practice Group

By Brian L. Blaylock and Dana Ontiveros

Introduction

On May 30, 2025, Assembly Bill No. 239 (AB 239) was signed into law by Nevada Governor Joe Lombardo following its approval by the Nevada State Legislature. AB 239 amends the Nevada Revised Statutes (NRS) applicable to corporations, limited liability companies, and other business entities formed in Nevada. These reforms reflect a deliberate effort to strengthen Nevada’s appeal to corporations and position itself as a viable alternative to Delaware and Texas for entity formation. Changes to Nevada corporate law under AB 239 include the following:

1. Fiduciary Duties of Controlling Stockholders

AB 239 clarifies that stockholders generally do not owe fiduciary duties to the corporation or other stockholders except as applicable to a “controlling stockholder,” which AB 239 defines as a stockholder who has the voting power to elect at least a majority of the corporation’s board of directors. AB 239 further states that a controlling stockholder’s sole fiduciary duty is to refrain from exerting undue influence over any director or officer of the corporation with the purpose and proximate effect of inducing a breach of fiduciary duty by such director or officer (i) for which the director or officer is liable pursuant to NRS 78.138,¹ (ii) that directly relates to the initiation, evaluation, or approval by the board of directors of a contract or transaction to which the controlling stockholder is a party or in which the controlling stockholder has a material, nonspeculative financial interest, and (iii) that results in material, nonspeculative, and non-ratable financial benefit to the controlling stockholder, which benefit excludes (and results in a material, nonspeculative detriment to) the other stockholders generally. AB 239 also provides that a controlling stockholder is presumed to have not breached the above fiduciary duty if the contract or transaction at issue was approved by a committee of disinterested directors (or by the full board in reliance on the recommendation of such a committee).

2. Waiver of Jury Trials for Internal Actions

To the extent not inconsistent with federal law, a Nevada corporation may now include in its articles of incorporation an enforceable jury trial waiver for all or certain “internal actions,” which NRS 78.046 defines as actions (i) brought in the name or right of the corporation or on its behalf, (ii) for or based on a breach of a fiduciary duty owed by any director, officer, employee, or agent of the corporation in such capacity, or (iii) arising pursuant to, or to interpret, apply, enforce, or validate, any provision of Nevada corporate law or the corporation’s governing documents.

3. Changes to Authorized Shares of Public Companies

For publicly traded corporations, AB 239 lowers the stockholder approval threshold for amendments to a corporation’s articles of incorporation that relate only to an increase or decrease in the corporation’s authorized shares. Such amendments can now be approved by a routine stockholder vote, rather than the higher “majority of the voting power” standard (which still applies to corporations that are not publicly traded). 

4. Holding Company Reorganizations

Unless prohibited under its articles of incorporation, a Nevada corporation may now reorganize into a holding company structure without stockholder approval by (i) merging with a wholly owned subsidiary and becoming a subsidiary of a new holding company and (ii) issuing stockholders shares in the new holding company in exchange for their previous shares in the existing corporation. The ownership and organizational documents of the new holding company must be substantively identical to that of the existing corporation, and AB 239 includes other conditions and safeguards, all of which are intended to prevent misuse of the new law. 

5. Notices Include Related Materials

Information and materials that are enclosed with, or annexed or appended to, a notice given under NRS Title 7 are now explicitly deemed part of such notice. This change aligns Nevada’s corporate law on this issue with that of Delaware.²

6. Board Approval of Agreements

Boards of directors of Nevada corporations are now explicitly permitted to approve agreements, instruments, or other documents in either final form or such preliminary form as the board deems appropriate in its business judgment.  

7. Stockholder Agreements May Reference External Facts

Agreements between stockholders of a Nevada corporation (or between the corporation and one or more stockholders) are now expressly permitted to require that shares be voted based on facts or events outside the agreement. This change aligns NRS 78.365 (which governs voting agreements) with existing NRS 78.195(4), under which the voting powers, designations, preferences, limitations, restrictions, and relative rights for the shares of a class or series of stock may be made dependent on facts or events outside the articles of incorporation. 

Conclusion

AB 239 represents a significant step forward in the Nevada legislature’s efforts to make Nevada an appealing and supportive destination for businesses and their decisionmakers. Companies that have incorporated in Nevada (or that are considering incorporating or reincorporating in Nevada) should consult with Nevada legal counsel to evaluate whether the reforms enacted under AB 239 can further advance their legal and business objectives.