DEF 14C: Coinbase Reincorporates to Texas from Delaware

Coinbase Global, Inc. is reincorporating from Delaware to Texas, citing Texas's pro-business and pro-crypto legal environment and potential cost savings.

Summary

• Coinbase Global, Inc. is reincorporating from the State of Delaware to the State of Texas by conversion, a move unanimously approved by its Board of Directors.
• Stockholders holding approximately 78.40% of the voting power of outstanding shares approved the reincorporation by written consent on November 4, 2025.
• The primary reasons for the reincorporation include Texas's innovative and code-based approach to corporate law, its pro-business regulatory climate, and its strong public support for blockchain and crypto innovation.
• The company expects to eliminate its annual Delaware franchise tax, which was $250,000 for the most recent period, as Texas does not have a comparable tax based on outstanding equity.
• The reincorporation will not result in any changes to business operations, jobs, management, properties, office locations, number of employees, obligations, assets, liabilities, or net worth (other than transaction costs).
• Coinbase's Class A common stock will continue to be traded on The Nasdaq Global Select Market under the symbol COIN, with no expected interruption in trading.
• Holders of Class A common stock are not entitled to appraisal rights with respect to the reincorporation.
• Holders of Class B common stock who did not consent to the reincorporation may seek appraisal rights under Section 262 of the Delaware General Corporation Law.

Sentiment

Score: 7

Explanation: The reincorporation is a strategic move aimed at long-term benefits, including a more favorable legal and regulatory environment for crypto businesses and potential cost savings. While there are risks associated with less established case law in Texas and potential shareholder criticism, the company has undertaken a thorough review process and believes the move aligns with its mission and strategic objectives. The dual-class structure remains, and core business operations are unaffected.

Positives

• Texas offers a legal framework that fosters innovation, predictability, and operational flexibility, aligning with Coinbase's mission to increase economic freedom.
• Texas's code-based approach to corporate law is viewed as better supporting strategic planning by reducing reliance on judicial discretion and offering more predictable statutory standards.
• The state has a pro-business regulatory climate that limits unnecessary compliance obligations and minimizes administrative costs, providing a cost-effective platform for growth.
• Texas has established itself as a national leader in digital asset adoption, with clear rules, a supportive pro-innovation government, and a 'pro-crypto mentality,' including the creation of a Strategic Bitcoin Reserve.
• The reincorporation will eliminate the annual Delaware franchise tax, which cost the company $250,000 in the most recent period.
• Texas law allows for the adoption of a minimum ownership threshold (up to 3%) for derivative claims, which the company believes will reduce opportunistic litigation.
• The random case assignment in Texas Business Courts is seen as promoting diversity of jurisprudential viewpoints and avoiding the appearance of partiality in corporate law matters.
• Under Texas law, directors are not prohibited from considering the interests of other constituents beyond long-term stockholder value maximization.

Negatives

• There is no assurance that the reincorporation will result in all or any of the anticipated benefits.
• Texas has less extensive case law and a less established court system compared to Delaware, which may lead to less predictability in legal outcomes for certain corporate affairs and transactions.
• The Texas Business Courts, established in September 2024, have not yet developed extensive case law.
• Recent amendments to the Texas Business Organizations Code (TBOC) are new, untested, subject to judicial interpretation, and facing ongoing litigation challenging their validity.
• The company may face criticism over its decision to reincorporate in Texas from shareholders or advisory services like Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co.
• Some Class A stockholders will lose books and records inspection rights under Texas law, which requires a minimum of 5% ownership or a six-month holding period, unlike Delaware law.

Risks

• There is no assurance that the Reincorporation will result in all or any of the benefits described, including those related to incorporation in Texas or the application of Texas law.
• The company may face legal challenges to the Reincorporation, including stockholder challenges under Delaware law, seeking to delay or prevent it.
• The Reincorporation may be delayed by the Board of Directors, or the Plan of Conversion may be terminated and abandoned by action of the Board of Directors, at any time prior to the Effective Time.
• Texas case law concerning the effects of its statutes and regulations is more limited than Delaware, and the newly established Texas Business Courts (since September 2024) have not yet developed extensive case law, leading to less precedent.
• The TBOC Amendments are new, untested, and subject to judicial interpretation, with ongoing litigation challenging their constitutional validity, which could have an adverse effect on the business.
• The company has incurred and will incur certain costs in connection with the Reincorporation, and additional unanticipated costs may arise.
• The Reincorporation, regardless of merit, could result in litigation, leading to additional expense and distraction for the company, and potentially substantial monetary damages or attorneys' fees.
• The company may face criticism over its decision to reincorporate in Texas from shareholders or advisory services such as ISS and Glass Lewis.
• Changes in stockholder rights under Texas law, such as the requirement for 5% ownership or a six-month holding period for books and records inspection, may adversely affect some stockholders.
• Certain effects of the Reincorporation, particularly under Texas law, may be considered to have anti-takeover implications, which could be viewed negatively by some investors.
• The fair value determined in any appraisal proceeding for Class B common stock could be less than, equal to, or more than the value of the Texas Corporation Class B common stock to be issued.

Future Outlook

The company expects to continue its business without interruption, with Class A common stock trading on Nasdaq under COIN. The reincorporation is intended to provide a more predictable legal environment, foster innovation, and reduce litigation risks and costs, supporting the company's long-term strategic objectives in the crypto space. The company will continue to file required periodic reports and other documents with the SEC and use its various communication channels for material non-public information disclosure.

Management Comments

• Our mission is to increase economic freedom in the world.
• We are working to update the century-old financial system by providing a trusted platform that makes it easy for our customers to engage with crypto assets.
• We also provide critical infrastructure for the onchain economy and support builders who share our vision of bringing the world onchain.
• The Board of Directors and Special Committee views Texas's increasingly code-based approach as better supporting the Company's strategic planning in today's competitive environment.
• Texas's legal framework is intended to reduce reliance on judicial discretion, offers potentially more predictable statutory standards, and is well-aligned with the needs of businesses operating at the forefront of innovation.
• Texas has built a reputation as one of the most business-friendly states in the country, making it an attractive place to incorporate.
• For technology and high-growth corporations like ours, this combination of legal flexibility, protective statutes, and a light-touch tax and regulatory environment provides a cost-effective, low-friction platform for growth.
• The Board of Directors and the Special Committee believe that a potentially more predictable legal environment will better allow the Company to pursue its mission of innovation and may help us attract and retain qualified management and directors.
• Reincorporation may also result in cost savings for the Company and its stockholders, who bear the defense costs for corporate litigation through attorneys fees, indemnification obligations and increased insurance premiums.
• The State of Texas has firmly established itself as a national leader in digital asset adoption—viewing crypto not as a niche experiment, but as a cornerstone of its economic future.
• The Reincorporation is not being effected to prevent a sale of the Company, nor is it in response to any present attempt known to the Board of Directors to acquire control of the Company or obtain representation on the Board of Directors.

Industry Context

The reincorporation reflects a broader trend of states, particularly Texas and Nevada, actively modernizing corporate law and competing with Delaware to attract corporations. Texas's specific focus on digital asset adoption and its 'pro-crypto mentality' aligns with Coinbase's core business, positioning it favorably within the evolving blockchain and cryptocurrency industry landscape. This move could influence other crypto-focused companies to consider similar reincorporations, highlighting a potential shift in preferred corporate domiciles for innovative tech sectors.

Comparison to Industry Standards

• **Shareholder Approval for Fundamental Actions**: Delaware defaults to a majority vote for fundamental business transactions; Texas defaults to 2/3, but Coinbase's Texas Charter will specify a majority to align with its current Delaware Charter.
• **Board Vacancies**: Delaware allows the board to fill all vacancies; Texas prevents a board from filling more than two vacancies caused by an increase in board size between annual meetings, and directors appointed to fill new positions serve only until the next election.
• **Director/Officer Liability**: Both states allow limitation of liability, but Texas law requires proof of intentional misconduct, fraud, an ultra vires act, or a knowing violation of law for a breach of duty claim, preventing claims based on negligence or gross negligence.
• **Stockholder Action by Written Consent**: The Delaware Charter generally prohibits written consent unless specific conditions are met (e.g., after a Staggered Board End Date, majority vote); the Texas TBOC requires unanimous consent unless the charter specifies a lesser majority, and Coinbase's Texas Charter will allow majority written consent under similar conditions to its Delaware Charter.
• **Calling Special Stockholder Meetings**: Delaware allows only the Board/Chair/CEO to call; the Texas TBOC allows the president, board, or holders of at least 10% (or up to 50% if specified in charter) of voting shares to call. Coinbase's Texas Charter will allow holders of not less than 50% of voting power to call.
• **Jury Trial Waivers**: The Delaware Charter does not include a jury trial waiver; the Texas TBOC allows, and Coinbase's Texas Charter will include, a waiver for internal entity claims.
• **Books and Records Inspection**: Delaware has no minimum shareholding/holding period; Texas requires 5% ownership or a six-month holding period. Emails/texts are generally not considered books and records in Texas unless they effectuate a corporate act.
• **Fiduciary Duties**: Delaware case law emphasizes long-term stockholder value maximization; the Texas TBOC allows directors to consider long-term and short-term interests, including continued independence, and social purposes. Texas case law generally does not impose formal fiduciary duties on controlling shareholders to minority shareholders.
• **Business Judgment Rule**: Both states protect directors, but Texas's codified rule requires proof of intentional misconduct, fraud, an ultra vires act, or a knowing violation of law to rebut the presumption, preventing claims based on negligence or gross negligence.
• **Anti-Takeover Provisions**: Both states permit anti-takeover defenses. Texas business combination provisions apply at 20% ownership, compared to 15% in Delaware. Texas law allows directors to consider long-term interests and continued independence in change of control transactions, similar to Delaware's 'just say no' defense, but Delaware requires directors to seek the best price once a sale is pursued.
• **Derivative Suits Ownership Threshold**: Delaware has no express statutory minimum; the Texas TBOC allows publicly traded corporations to set a minimum ownership threshold (up to 3%) for derivative claims. Coinbase's Texas Bylaws will set a 3% ownership threshold.
• **Regulation of Proxy Advisors**: Texas has specific disclosure requirements for proxy advisors that do not make recommendations solely in shareholders' financial interests, and there is ongoing litigation challenging these. Delaware has no such statute.
• **Judicial Certification of Committees/Panels**: Texas allows corporations to request judicial certification of independence for special committees/panels reviewing transactions or derivative claims. Delaware has no such statute.
• **Threshold for Stockholder Proposals**: Texas allows public corporations headquartered in Texas or listed on a Texas exchange to prohibit proposals unless shareholders hold >$1,000,000 of stock or >3% of voting shares for 6 months, and solicit 67% of voting power. Delaware has no such statute.

Management Changes

Corporate Governance

Legal Proceedings

• The company may face legal challenges to the Reincorporation, including stockholder challenges under Delaware law, seeking to delay or prevent it.
• There is ongoing litigation challenging certain of the TBOC Amendments, including a board's ability to adopt a minimum ownership threshold for derivative claims and proxy advisory services disclosure requirements.
• A preliminary injunction was entered on August 30, 2025, enjoining the Texas Attorney General from enforcing proxy advisory services disclosure requirements against ISS and Glass Lewis.
• The reincorporation will not extinguish the standing of plaintiffs in derivative actions pending at the Effective Time or their ability to initiate such actions for prior acts/omissions, provided they maintain shareholder status in the Texas Corporation.

Related Party Transactions

• The Consenting Stockholders, who approved the reincorporation, include Fredrick Ernest Ehrsam III, The Brian Armstrong Living Trust, The Ehrsam 2014 Irrevocable Trust, The Frederick Ernest Ehrsam III Living Trust, the Brian Armstrong 2018 Irrevocable Trust, The Armstrong 2014 Irrevocable Trust, the Brian Armstrong Legacy Trust, and the Brian Armstrong 2018 Non-Grantor Trust.
• All shares of capital stock held by the Consenting Stockholders are beneficially owned by Brian Armstrong (Chairman and CEO) and Fred Ehrsam (Board member) or by trusts established by or associated with them.
• These Consenting Stockholders collectively held approximately 78.40% of the voting power of the company's outstanding capital stock as of October 31, 2025.

Stakeholder Impact

• **Shareholders**: Will experience changes in corporate governance, including modified shareholder rights related to books and records inspection, derivative suit thresholds, and the ability to call special meetings. Class B stockholders have appraisal rights, while Class A stockholders do not. There is also potential for less established case law in Texas.
• **Management and Directors**: Will benefit from increased protection against certain types of liability under Texas law, which may aid in attracting and retaining qualified personnel. No changes to current management or board positions are expected.
• **Company (overall)**: Anticipates benefits from a more predictable and business-friendly legal and regulatory environment, alignment with a pro-crypto state, and cost savings from eliminating Delaware franchise tax. However, it faces potential risks from legal challenges and uncertainties due to the newer Texas corporate law and business courts.
• **Employees**: No changes in the number of employees or existing employment agreements are expected.
• **Customers, Suppliers, and Creditors**: No adverse effect on material contracts or obligations is anticipated, as the company's rights and obligations will continue under the Texas Corporation.

Next Steps

• Effectuate the Reincorporation no earlier than 20 calendar days after the mailing of the Information Statement (on or about November 24, 2025).
• Make necessary filings with the Secretary of State of Texas and the Secretary of State of Delaware.
• Execute and deliver supplemental indentures to the trustee for the company's convertible senior notes.
• The Board of Directors may in the future propose other measures designed to address hostile takeovers if deemed warranted.
• Continue to file required periodic reports and other documents with the SEC.
• Continue to use its Investor Relations website, blog, press releases, public conference calls and webcasts, X feeds, LinkedIn page, and YouTube channel for disclosing material non-public information.

Key Dates

Recommendation

The reincorporation is a strategic corporate governance move aimed at long-term benefits, such as a more favorable legal environment for crypto and potential cost savings. While it introduces some legal uncertainties due to Texas's newer corporate statutes and business courts, it does not immediately impact the company's financial performance or operational outlook. The dual-class share structure and management remain unchanged. Investors should monitor the transition and the development of Texas corporate case law, but the filing itself does not present a strong case for immediate buying or selling based on fundamental business changes.

Keywords

Coinbase, reincorporation, Texas, Delaware, corporate governance, crypto, blockchain, shareholder rights, business law, COIN, dual-class stock, appraisal rights, convertible notes, franchise tax