ArcBest investors approved a move last month that’s slated to occur on or around May 15: switching the company’s incorporation from Delaware to Texas.
Shareholders voted on the measure at the company's annual meeting, approving it with 13.9 million votes compared to 6.9 million against it. The move seeks to better protect directors and officers.
The board advocated for the change based on several reasons, such as:
- Texas business rules provide “more clarity and predictability for decision-making than Delaware’s judicial approach”
- The move “may reduce the potential for opportunistic and frivolous litigation that generates costs without a corresponding corporate benefit”
- The company has a bigger operational connection to Texas than Delaware, including 17 facilities in the Lone Star State (more than any other state for ArcBest) and its Dallas distribution center
While ArcBest switched its incorporation to Delaware in 1966, high-profile litigation in recent years has pushed businesses to reconsider their own frameworks in states, an annual proxy statement for the company noted.
Board members reviewed the matter through 2025 and tapped the law firm Sidley Austin for input on advantages and disadvantages in alternative jurisdictions, the statement said.
Notably, ArcBest wanted to back directors and officers in their decision-making and avoid risks associated with unclear judicial-based interpretations, saying Texas business code provides a more preferable environment and standard, such as limiting director liability, that still gives protection to shareholders “from intentional misconduct, fraud and other improper acts.”
Similarly, frivolous lawsuits can be mitigated due to Texas’ more protective business environment because of that more predictable legal framework, the company said.
The redomestication does not affect the company’s headquarters, business, jobs, management, properties, the location of any of its offices or facilities or the number of employees, the company noted.
Other transportation companies have also recently shifted their incorporation status. Last year, Forward Air redomesticated from Tennessee to Delaware, citing predictability and flexibility in the latter’s state law as well as its ability to facilitate strategic review options. In 2024, PAMT shifted its domicile from Delaware to Nevada, saying it could safeguard against possible hostile takeovers.
