Dive Brief:
- Universal Logistics Holdings is asking its shareholders to approve a proposal to convert the company to a Nevada corporation, according to a preliminary proxy statement.
- The company’s board of directors believes Nevada has a more favorable statutory framework that could potentially better protect both themselves as well as officers from “unmeritorious” lawsuits. Universal has been incorporated in Michigan since 2001.
- “The increasing frequency of claims and litigation directed towards directors and officers has greatly increased the risks facing directors and officers of public companies in exercising their duties,” the filing states.
Dive Insight:
Securities class action filings are on the rise again with 225 filed last year, up from 215 in 2023, according to a report by Cornerstone Research and Stanford Law School’s Securities Class Action Clearinghouse. Additionally, losses from such lawsuits increased 23% to $438 billion in 2024, the report found.
As a preventative measure, the company’s board believes that by taking advantage of Nevada’s corporate laws — which allow for broader exclusion of individual liability — it can reduce those risks and therefore attract and retain qualified management. However, Universal said there are no known lawsuits or pending claims against any of its directors or officers.
In its reasoning for the conversion, the board also highlighted that incorporating in Nevada would provide it with “corporate flexibility in connection with certain corporate transactions.”
If the proposal is passed, Universal intends for the conversion to take place shortly after its annual meeting on April 23. The company would keep its headquarters in Michigan for the foreseeable future, noting that the conversion would not change its business, properties, assets, obligations or management.
Universal is the second trucking giant to consider relocation this year. In February, TFI International announced its plans to redomicile to the U.S. from Canada, seeking advantages in foreign exchange rates and U.S. Department of Defense contracts. But the carrier later reversed course after shareholder backlash.
