In an effort to ensure Delaware remains the choice destination for businesses to incorporate, a bill is being fast-tracked to update corporate laws. The state has a long history of resolving business disputes and is home to a significant number of corporate entities, including many Fortune 500 companies.

While supporters believe the legislation will modernize laws and maintain a balance between corporate officers and shareholders, critics, such as institutional investors and pension funds, argue that it may weaken corporate governance standards and shareholder rights. The bill recently passed the state Senate unanimously.

The bill comes in the wake of a Delaware court invalidating Elon Musk's Tesla compensation package, which was valued at over $55 billion. The judge ruled that the package, approved by Musk-influenced directors and shareholders based on misleading information, was invalid. Musk, who temporarily lost his ranking as the wealthiest individual, has criticized Delaware and suggested other states like Texas and Nevada for incorporation.

Amid concerns of a potential corporate exodus, Musk has already relocated Tesla's corporate listing to Texas and his other companies to different states. The bill aims to address rising discontent among corporations following recent Delaware court decisions related to conflict-of-interest cases.