Delaware, the most popular state for corporate registrations, has challengers who say that it doesn’t offer enough protections against shareholder lawsuits, the Wall Street Journal reported today. Like thousands of U.S. companies, Dole Food Co. was attracted by the Delaware’s business-friendly reputation: Managers enjoy broad latitude in day-to-day operations, from corporate spending to buyouts. Firms are shielded by tough antitakeover laws. And special business courts, widely considered the most sophisticated in the nation, have over the decades blessed new corporate defenses and set clear rules for the rough-and-tumble merger world. However, Dole is one of several companies that say the state has become less hospitable toward business. Among their gripes: a growing tide of shareholder litigation, which some feel the state hasn’t done enough to curb. One new measure bars companies from shifting their legal fees to shareholders who sue and lose — a boon to would-be plaintiffs.
