Not to be outdone by Delaware and Texas, the Nevada Senate voted unanimously on May 21, 2025, to adopt Assembly Bill No. 239 (AB 239), which provides for significant amendments to the Nevada Revised Statutes (NRS) governing Nevada corporations. The legislation was initially proposed by the State Bar of Nevada’s Executive Committee, Business Law Section, which also prepared a memorandum summarizing the changes.
The memorandum explains that the proposed amendments are intended to provide greater clarity and to respond to practice considerations, requests/comments from other attorneys, and other business law developments in other states (presumably Delaware and Texas). While the memorandum does not address the corporate amendments just adopted in Texas, it does reference the existing corporate laws in Delaware, including recently adopted amendments to the Delaware General Corporation Law (DGCL)—making clear that the proposed changes are an attempt to appeal to corporations and challenge Delaware’s status as the preferred state for incorporation.
Key changes proposed by AB 239 are summarized below.
The proposed amendments to § 78.240 would codify the fiduciary duties and liability of Nevada corporation controlling stockholders.
First, the amendments would clarify that stockholders, in their capacity as stockholders, do not owe fiduciary duties to either the corporation or its stockholders, except as described below with respect to controlling stockholders.
Second, the proposed amendments explain that controlling stockholders have just one fiduciary duty – to refrain from exerting undue influence over a director or officer of the corporation with the purpose and proximate effect of inducing a breach of fiduciary duty by the director or officer that:
The type of controlling stockholder contract or transaction to be scrutinized under the Nevada amendments resembles the definition of “controlling stockholder transaction” recently adopted in Delaware with a few important distinctions.
The Delaware test for “controlling stockholder transaction” set forth in DGCL § 144(e)(3) requires a “financial or other benefit” not generally shared with other stockholders. The Nevada test requires a material, nonspeculative, and non-ratable financial benefit. There is no materiality requirement under the Delaware test and the benefit need not be financial. Furthermore, the Nevada test specifically requires that the benefit be “nonspeculative” and that the contract or transaction causes actual harm to the other stockholders. This is not expressly the case in Delaware—but recent Delaware Supreme Court case law has moved in that direction (see the Maffei v. Palkon discussion of temporality considerations regarding claims of breach of fiduciary duties by a controlling stockholder in connection with Tripadvisor’s reincorporation from Delaware to Nevada).
The proposed amendments to NRS § 78.240 also include a presumption that there is no breach of fiduciary duty by a controlling stockholder if the underlying contract or transaction has been approved by either:
This change mirrors the safe harbor offered to controlling stockholders and control groups under DGCL § 144. However, it does not expressly codify the possibility of approval by disinterested stockholders or the “fair as to the corporation and its stockholders” cleansing possibility.
Finally, the proposed amendments to NRS § 78.240 explain that a stockholder will not be individually liable to the corporation, its stockholders, or creditors unless the:
The memorandum explains that the proposed changes to NRS § 78.240 are “in light of the Delaware Legislature’s recent push to codify in this area” and help “maintain Nevada’s competitive advantage as a leader in stable, predictable and common-sense corporate law.”
While the Delaware amendments do not specifically address the fiduciary duties of stockholders (and specifically controlling stockholders), the corporate legal community is anxiously awaiting a decision from the Delaware Supreme Court in the appeal of Tornetta v. Musk, which may address this question and other issues related to controlling stockholders of Delaware corporations.
The amendments to § 78.240 of the NRS would define a “controlling stockholder” as a stockholder having the voting power, by virtue of such stockholder’s relative beneficial ownership of shares or otherwise, to elect at least a majority of the corporation’s directors.
Notably, the definition for “controlling stockholder” proposed by the Nevada legislature is much narrower than the test just adopted in Delaware and reflected in DGCL §144.
Under DGCL § 144(e)(2), a “controlling stockholder” includes any stockholder who:
The memorandum explains that the proposed test for “controlling stockholder” in Nevada will ensure that only stockholders “truly in a position to control the direction and management of the corporation [are captured in the definition], without arbitrary ownership thresholds or ambiguous standards that could undermine predictable and stable application” (an apparent criticism of the Delaware test).
The amendments to § 78.240 of the NRS define a “disinterested director” as a director who:
Again, the test for when a director is no longer a “disinterested director” under the proposed Nevada amendments appears to be, in some respects, narrower than the one just adopted in Delaware. For example, the Nevada test would require a “material and nonspeculative financial interest” for a director to be deemed “interested.” The test in Delaware merely requires a “material interest” in the act or transaction and is not limited to a financial interest. On the other hand, to be a disinterested director of a Nevada public company, the director must also satisfy the independent standards of section 10A(m) of the Securities Exchange Act (other than the financial literacy requirements). In Delaware, a public company director who is not a party to the contract or transaction and satisfies the applicable criteria for determining independence, is presumed to be disinterested—a heightened presumption.
Similar to the recent Texas legislation, the proposed amendments to NRS § 78.046(4) would allow a corporation to include in its articles of incorporation an enforceable waiver of the right to a jury trial concerning any “internal action” (as defined by the NRS).
The memorandum explains that the reason for this change is “to give some comfort to companies considering a move to Nevada, since jury trials are unavailable for cases heard in the Delaware Court of Chancery.”
The proposed amendments to NRS § 75.150 clarify that any materials provided, along with a notice or other communication, will be deemed part of the notice or communication solely for purposes of determining whether notice was duly given under the NRS and the “organic rules” of the entity providing the notice or other communication.
The memorandum explains that this change was made in response to Delaware litigation that called into question whether such materials are part of the notice provided to stockholders. In 2024, the Delaware legislature adopted amendments to § 232 of the DGCL to clarify that materials provided along with a notice are deemed part of the notice. This was in response to Sjunde Ap-Fonden v. Activision Blizzard et al., where the Court of Chancery found Activision’s notice to stockholders to be technically deficient.
The proposed amendments to NRS § 78.315(5) provide that the board of directors of a Nevada corporation may approve, adopt, or otherwise act upon any agreement, instrument, certificate, or other document in final form, or such preliminary form as the directors deem appropriate in their business judgment.
While the memorandum does not specifically reference the Activision case in Delaware or the amendments to § 147 of the DGCL adopted in 2024 as a result—which now authorize Delaware corporate boards to approve documents in final or substantially final form—we assume that this proposed change to the NRS is the result of the 2024 amendments to the DGCL.
The proposed amendments to NRS §§ 78.2055 and 78.207 clarify that, for any publicly-traded corporation, the approval required for a reverse stock split from any adversely affected class or series may be based on a “vote of the stockholders” of such class or series rather than a vote of a “majority of the voting power” unless the articles of incorporation require a greater proportion.
The proposed amendments to § 78.390 would also lower the approval required for a publicly traded corporation to amend its articles of incorporation solely for the purpose of increasing or decreasing the number of shares the corporation is authorized to issue from a “majority of the voting power” to a “vote of the stockholders of the affected class or series.”
The proposed amendments to NRS § 78.365 would permit voting agreements to require that stock held by parties to the agreement be voted “in a manner dependent upon any fact or event which may be ascertained outside of the agreement if the manner in which a fact or event may operate upon the exercise of the voting right is stated in the agreement.”
The proposed amendments to NRS Chapter 92A would permit a Nevada corporation to reorganize through the formation of a parent holding company and issue shares in the new parent holding company to stockholders in exchange for their shares in the existing corporation—all without stockholder approval—subject to the conditions described therein, and provided that the reorganization option may not be used to avoid the provisions of Nevada’s acquisition of control share statutes or its business combination statutes. The amendments would also require the governing documents for the resulting holding company and surviving company to include certain provisions relating to majority ownership, common management, and voting requirements for a minimum period of two years.
The memorandum specifically references § 251(g) of the DGCL, which permits this type of restructuring without stockholder approval.
The Nevada Assembly also recently approved AJR 8, which proposes an amendment to the Nevada Constitution to authorize the legislature, to the extent money is available, to provide by law for the establishment of a business court. If established, that court will have exclusive original jurisdiction to hear disputes involving shareholder rights, mergers and acquisitions, fiduciary duties, receiverships involving business entities, other commercial or contractual disputes between business entities, and any other business disputes of a similar nature in which equitable or declaratory relief is sought. However, it has been suggested that because the process for amending Nevada’s constitution is extensive, this change, if approved, would likely not be implemented for several years.