Response to Michal Barzuza’s “Nevada V. Delaware”

Key Takeaways

• Response signed by Nevada governor, secretary of state, and 20 lawyers.
• Draft omitted key Nevada Supreme Court rulings and multimillion‑dollar settlements.
• Barzuza’s paper contains misquoted citations and inaccurate legislative history.
• Nevada’s business‑judgment rule defaults to liability protection, unlike Delaware’s opt‑in.
• Nevada law still bars intentional fraud, limiting low‑value shareholder lawsuits.

Pulse Analysis

The debate over corporate jurisdiction has intensified after Professor Michal Barzuza’s “Nevada v. Delaware” gained traction on platforms like Harvard Law’s Corporate Governance Forum and Columbia’s Blue Sky Blog. The paper argues that Nevada offers a near‑liability‑free environment for directors, positioning it as a stark alternative to Delaware’s well‑established framework. However, the rapid circulation of these claims has prompted Nevada’s top officials—including Governor Joe Lombardo and Secretary of State Francisco V. Aguilar—to collaborate with legal scholars in a formal response, aiming to restore balance in the discourse.

The response points to several substantive gaps in Barzuza’s draft. It notes that only four Nevada court decisions are cited, omitting pivotal Supreme Court rulings that temper the notion of absolute protection. Moreover, the draft fails to acknowledge a series of high‑profile settlements—ranging from six‑figure fee agreements to a pending $17 million resolution—documented in SEC filings. Misquotations and a skewed reading of legislative minutes further erode the paper’s credibility, especially regarding Nevada’s business‑judgment rule, which operates as a default opt‑out mechanism rather than Delaware’s opt‑in model.

For investors, advisors, and corporate executives, the distinction matters. Nevada’s approach reduces low‑value litigation risk and offers clearer guidance for board actions, yet it does not grant immunity from intentional misconduct or fraud. Understanding these nuances helps firms align their governance structures with strategic risk tolerances. As the jurisdictional conversation evolves, accurate, evidence‑based analysis will be essential for making informed incorporation decisions and for shaping future corporate‑law scholarship.