Nevada as a Leading-Edge Corporate and M&A Jurisdiction

Introduction

Nevada’s corporate law framework emphasises statutory clarity, protections for directors and officers of responsible businesses, and a policy orientation favouring the continual, thoughtful modernisation of Nevada’s business statutes in light of new developments and business trends.

Nevada’s body of corporate law relies heavily on its clear statutes rather than judge-made law. Key principles governing fiduciary duties, board of directors (“Board”) and manager authority, and M&A approvals are set forth directly in the statutes, namely Chapters 78, 86 and 92A of the Nevada Revised Statutes (NRS). Nevada’s well-defined statutory approach arguably offers a greater degree of predictability compared to judge-made law.

Nevada has made a deliberate policy choice to prioritise predictability and certainty, while ensuring that Nevada is a leader in business-friendly, modern corporate law statutes. As the Nevada State Bar Business Law Section Executive Committee summary noted in connection with Nevada’s 2025 business law legislative amendments, amendments are made with a view to maintaining and solidifying Nevada’s position as “a leader in stable, predictable, and common-sense corporate law”. Along these lines, Nevada’s statutory construct discourages nuisance suits and focuses on substantive, intentional Board misconduct, rather than second-guessing good faith Board decisions.

Board authority and the codified business judgement rule

NRS Chapter 78 expressly provides that the business and affairs of a corporation are managed under the direction of the Board, and this broad authority is reinforced by a strong, codified version of the business judgement rule.

Namely, under NRS Section 78.138(3), directors and officers are statutorily presumed to act in good faith, on an informed basis, and with a view to the interests of the corporation. This presumption is commonly referred to as the business judgement rule. As a note, a prudent Board will want to document its decision-making process with respect to a transaction (including documenting the information on which the Board is relying in approving the transaction) notwithstanding the protection of NRS Section 78.138(3). This presumption applies to all corporate actions except for actions resisting a change in corporate control, which impedes the right of stockholders to vote for or remove directors. With that one exception, unlike Delaware, there are no enhanced scrutiny, entire fairness or similar special rules that might apply based on the nature of the particular transaction.

Also, significantly, NRS Section 78.138 is a constituency statute, and NRS Sections 78.138(4) and (5) authorise the Board to consider multiple constituencies in connection with a proposed transaction and confirm that the Board is not required to consider any particular constituency as a dominant factor. Accordingly, NRS Section 78.138 provides the Board with significant flexibility to consider and weigh a variety of factors in connection with a potential transaction rather than solely focusing on maximising value to the stockholders.

Furthermore, and importantly, under NRS Section 78.138(7), directors and officers do not have personal liability unless the above business judgement rule presumption is rebutted, and it is also established that (i) they breached their fiduciary duties and (ii) the breach involved intentional misconduct, fraud or a knowing violation of law. This statutory formulation sets a notably high threshold for personal liability and serves as a meaningful constraint on specious fiduciary duty claims. The statutory business judgement rule aims to insulate directors “from liability for innocent mistakes while preserving liability for knowing misconduct” (Benjamin P. Edwards & Lori D. Johnson, 1 Nevada Business and Commercial Law § 6.22 (2026)).

Nevada case law has reinforced the primacy of this statutory standard. In Chur v Eighth Judicial District Court, 458 P.3d 336 (Nev. 2020), the Nevada Supreme Court made clear that NRS Section 78.138 provides the sole mechanism for imposing individual liability on directors and officers for damages, and specifically rejected gross negligence as an independent basis for director and officer liability. The Supreme Court also clarified the meaning of “intentional misconduct”, emphasising that it requires an intent to engage in wrongful conduct, not merely the intent to take an action that in and of itself is bad or adverse. This interpretation further narrows the scope of potential liability in transactional settings.

In Guzman v Johnson, 483 P.3d 531 (Nev. 2021), the Nevada Supreme Court confirmed that the business judgement rule is the governing framework for evaluating director conduct, and declined to adopt the tiered standards that characterise Delaware law.

Significantly, Nevada’s statutory framework, together with the Guzman and Chur cases, provides Boards with substantial discretion to evaluate and approve M&A transactions and do what they believe is right without exposure to the more expansive and context-specific forms of judicial scrutiny seen in other jurisdictions. In practical terms, this means that M&A plaintiffs in Nevada face a substantial pleading and proof burden: they must do more than allege conflicts, flawed process or even gross negligence; they must satisfy the statutory prerequisites for overcoming the business judgement rule and, in damages actions, show intentional misconduct, fraud or a knowing violation of law.

Notably, Nevada’s statutory framework for limited liability companies (LLCs) emphasises the contractual nature of LLCs by giving managers broad authority to make decisions, subject to limitations (if any) within the governing documents, and provides that managers only owe a fiduciary duty to act in good faith, although members may include additional manager fiduciary duties in the LLC’s governing documents if so desired.

The evolution of fiduciary standards in M&A transactions

Nevada’s modern approach to fiduciary duties in the M&A context reflects a broader shift toward statutory primacy in Nevada corporate law. Through amendments such as NRS Section 78.012 and related provisions, the Nevada Legislature has made clear that director and officer duties must be determined by the plain meaning of Nevada’s statutes rather than by imported foreign doctrines.

This statutory focus is additionally evident in the change-of-control context. Nevada has not left takeover-related fiduciary questions solely to general common law development; instead, NRS Section 78.138(8) provides that – except when the stockholders’ right to vote for or remove directors is affected – changes in control are subject to the same standards as other transactions, and NRS Section 78.139 specifically addresses the duties, presumptions and powers of directors and officers in the latter case. These statutory developments, taken together with recent case law, show Nevada’s deliberate movement toward a distinct, generally more director-protective framework in which the text of Nevada’s corporate statutes, not foreign common law overlay, supplies the governing rule.

The statutory framework for M&A: NRS Chapter 92A

Mergers and acquisitions involving Nevada corporations are governed by NRS Chapter 92A, which provides a relatively streamlined and flexible framework for transactional approval.

The Board plays the central role in initiating and approving merger transactions, with stockholder approval generally required as a matter of statute. However, Nevada law makes it comparatively difficult to challenge mergers on speculative or technical grounds, reflecting a policy preference for facilitating transaction completion.

Although Nevada law does not impose the same judicially developed requirements seen in other jurisdictions, such as the use of independent committees in certain conflict scenarios, market practice continues to influence deal structuring. The use of a disinterested committee, for example, may still be advisable in appropriate circumstances to enhance process integrity and mitigate risk, even if not strictly required.

Stockholder approval requirements for private company mergers and acquisitions

Determining how a privately held Nevada corporation must approve an M&A transaction typically presents two separate inquiries. First, the Board must determine whether the stockholders need to approve the transaction. Second, the Board must determine how to obtain the approval of the stockholders, if needed. While the following discussion focuses on privately held Nevada corporations, similar considerations generally apply to Nevada LLCs under NRS Chapters 86 and 92A, except where noted below.

The inquiry into whether a corporation’s stockholders will need to approve an M&A transaction is governed primarily by NRS Chapter 78 for asset and stock sales and by NRS Chapter 92A for mergers. The general rule under Nevada corporate law is that the Board has full control over the affairs of the corporation unless Nevada law or the governing documents of the corporation expressly provide otherwise. However, NRS Chapters 78 and 92A do require stockholder approval for certain M&A transactions, in addition to any approval provisions in the corporation’s governing documents.

In the case of a sale of the assets of a Nevada corporation, NRS Chapter 78 generally does not require stockholder approval unless the entity’s governing documents expressly provide otherwise or there is an asset sale involving the sale, lease or exchange of all of the corporation’s assets, including its goodwill, in which case NRS Section 78.565 requires the affirmative vote of stockholders holding at least a majority of the stockholder voting power.

Notably, the reference in NRS Section 78.565 to selling “all” of the corporation’s assets could, by its literal meaning, be interpreted to mean that stockholder approval does not need to be obtained if a selling corporation will retain any assets, no matter how insignificant those assets are. Although Nevada courts have not yet addressed the issue, we believe it is prudent to obtain stockholder approval for any sale of assets rising to the level of a sale of substantially all of the assets (and not just all of the assets). NRS Chapter 86 does not contain a provision equivalent to NRS 78.565, so the foregoing analysis of that statute does not apply to a Nevada LLC.

By contrast, stockholder approval is typically required for a merger involving a Nevada corporation under NRS Section 92A.120 (or NRS Section 92A.150 for a Nevada LLC), unless the merger falls under one of the exceptions specified in NRS Sections 92A.130 or 92A.180. Under the general stockholder approval process set forth in NRS Section 92A.120, the Board must approve a plan of merger and then recommend that plan to the stockholders, who then in turn must also approve that plan. It should be noted that Nevada generally prohibits “force the vote” provisions, which would allow shareholders to vote on a proposed merger not recommended by the Board. NRS Sections 92A.130 and 92A.180 (the latter of which also applies to a Nevada LLC) provide exceptions in which stockholder approval need not be obtained if:

• the surviving corporation in the merger will undergo few, if any, changes in its ownership and governance as a result of the merger; or
• a parent corporation is merging with its subsidiary.

Unless the Board is confident that the merger will fall under one of the aforementioned exceptions, the Board might choose to obtain stockholder approval in order to avoid having the merger later challenged for this reason.

The inquiry into how the stockholders approve an M&A transaction is largely governed by NRS Section 78.320. The stockholders can generally approve a transaction by:

• the affirmative vote of a majority of the stockholder voting power present at a stockholder meeting; or
• written consent of the stockholders holding at least a majority of the stockholder voting power, unless expressly provided otherwise in the corporation’s articles or bylaws.

If not otherwise required, Boards usually prefer to obtain stockholder approval by written consent in light of the various time, expense and procedural challenges associated with noticing and holding stockholder meetings, although a written consent admittedly might not be feasible depending on the number of stockholders and their receptiveness to the proposed transaction. By comparison, the members of a Nevada LLC typically approve transactions exclusively by written consent, unless the LLC’s governing documents adopt member meeting and voting requirements similar to those found in the corporate context.

The Board will want to pay particular attention to any potential conflicts of interest of the directors and officers in connection with a potential M&A transaction. If any such conflicts exist, the Board can try to structure the director and stockholder approval process in a manner that falls within the safe harbour provisions of NRS Section 78.140. Note that while Nevada law does not invalidate a transaction within the safe harbour simply because it involves a common or interested director, the presence of a common or interested director could serve as the basis for a breach of fiduciary duty claim.

The Board (or the managers of a Nevada LLC) might also want to consider the interplay of the various indemnification, advancement and insurance provisions for directors and officers in NRS Sections 78.7502 through 78.752 (or in NRS Sections 86.431 through 86.471 for LLC managers and members) with any comparable provisions in the entity’s governing documents when deciding whether to approve an M&A transaction.

Dissenters’ rights and the market-out exception

NRS Chapter 92A also governs dissenters’ rights, which allow stockholders in certain transactions (including many forms of mergers) to dissent and demand payment of the fair value of their shares if they carefully follow the defined statutory procedure. Under NRS Section 92A.360, members of a Nevada LLC do not have dissenters’ rights unless the LLC’s governing documents or the merger documents expressly provide for them.

In practice, however, the availability of these rights is significantly limited in Nevada because the statute includes a broad “market out” exception, under which dissenters’ rights are generally unavailable for shares that are publicly traded or widely held. As a result, dissenters’ rights are rarely implicated in public company M&A transactions involving Nevada corporations. This limitation reduces the risk of post-closing valuation disputes and contributes to overall deal certainty. By contrast, in jurisdictions where appraisal rights are more readily available, such claims have been a recurring source of litigation for public companies in the M&A context.

For private companies, given the potential for dissenters’ rights proceedings in connection with a merger, the Board will need to consider whether minority stockholders might seek to leverage these rights as a means of improving the merger consideration to which they will be entitled. In order to reduce the possibility of procedural dissenters’ rights disputes after a merger’s effective date in cases where either no stockholder approval is required or approval will be by consent and thus there could otherwise be no obligation of a stockholder to give notice of its intent to dissent prior to a merger, the Board might also consider sending an advance notice statement under NRS Section 92A.303 to the stockholders that describes the proposed merger and informs the stockholders that they will be deemed to waive their dissenters’ rights unless they deliver a statement of intent to the corporation asserting such rights by a specified deadline occurring prior to the merger’s effective date. Such an advance notice statement would not impact the valuation procedures set forth in NRS Chapter 92A with respect to the shares of any dissenting stockholder.

It is important to note that Nevada’s dissenters’ rights statutes do not empower dissenting stockholders to stop a merger from proceeding (provided that the corporation has complied with its governing documents and the applicable statutory procedures, and that the merger is not the proximate result of actual fraud against the dissenting stockholders or the corporation). Rather, the dissenters’ rights simply serve to determine whether the consideration that the dissenting stockholders will receive as a result of the merger may differ from the consideration that is specified in the transaction documents. The Board should nevertheless be aware that overly aggressive treatment of minority stockholders could invite additional scrutiny from courts.

2025 legislative amendments: Assembly Bill 239

Nevada’s legislature continues to refine and modernise its corporate law as a leading-edge jurisdiction, most recently in Assembly Bill (AB) 239, which was signed and became effective on 30 May 2025. These changes further strengthen Nevada’s pro-management framework and clarify key points relevant to mergers and acquisitions.

Notable aspects of AB 239 include the following.

• Clarification that stockholders (at least in their capacity as a stockholder) generally have no fiduciary duties to either the corporation or the other stockholders, and are entitled to vote (or not vote) their shares based on their own personal interests, with only a limited exception to this general rule for controlling stockholders.
• Codification of a clear controlling stockholder definition, defining controlling stockholders only as those stockholders that have the voting power to elect at least a majority of the corporation’s directors (ie, leaving out arbitrary ownership thresholds or subjective standards).
• Express provision that the only fiduciary duty of a controlling stockholder of a corporation in their capacity as a stockholder is 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 such director or officer for which the director or officer is liable pursuant to NRS Section 78.138 and the breach relates to a contract or transaction to which the controlling stockholder is a party or results in a material financial benefit to the controlling stockholder that results in a material detriment to the other stockholders generally.
• Adding a new provision that a corporation’s articles of incorporation may waive a jury trial for internal actions.

These developments are consistent with Nevada’s broader policy objective of preserving a stable and predictable corporate law environment while remaining responsive to market developments.

Practical implications for M&A practitioners

For practitioners advising on M&A transactions, Nevada offers a distinct set of advantages. The statutory clarity of its corporate law reduces interpretive uncertainty, while its pro-responsible business and Board-friendly orientation limits litigation risk and facilitates efficient deal execution.

These legal features are complemented by Nevada’s broader business environment, which includes the absence of a corporate income tax, relatively low annual fees and strong privacy protections. Together, these factors contribute to Nevada’s continuing, growing appeal as a corporate domicile.

Nevada offers a corporate law framework that is both distinct from other states and increasingly relevant in the M&A context. Its emphasis on statutory clarity, strong protections for responsible businesses, continual modernisation efforts and limited judicial intervention all provide a level of predictability that contrasts with more case law-driven jurisdictions.

As recent legislative developments demonstrate, Nevada remains committed to refining its corporate statutes to maintain competitiveness and address evolving market needs. For practitioners – particularly those seeking a more predictable and management-protective framework – Nevada represents a jurisdiction that warrants close consideration.