SpaceX IPO filing reportedly grants Elon Musk unchecked authority and bars investor lawsuits
Reuters reports the structure allows Musk to retain majority control while waiving rights to sue or pursue jury trials, aiming to raise approximately $75 billion.
A Reuters report indicates that SpaceX's initial public offering plan combines supervoting shares, mandatory arbitration, and Texas corporate law to grant CEO Elon Musk virtually unchecked executive power. The filing reportedly requires all shareholders to irrevocably waive rights to sue the firm or pursue jury trials, while also prohibiting class actions. By retaining over 50 per cent voting power, Musk will maintain majority control, enabling SpaceX to operate as a controlled company with reduced independent director requirements.
The proposed structure allows Musk to elect, remove or fill any vacancy on the board of directors and control major transactions, including potential mergers. Under this arrangement, the company would be exempt from requirements to have independent directors form a majority of nominating and compensation committees. The IPO aims to raise approximately $75 billion at a valuation exceeding $2 trillion, potentially making it the largest in history.
SpaceX plans to leverage a September 2025 Securities and Exchange Commission policy statement confirming that mandatory arbitration provisions are not inconsistent with federal securities laws. The filing reportedly makes it clear that anyone who owns shares irrevocably and unconditionally waives all rights to pursue a jury trial against the company, its directors, officers or bankers tied to the IPO. Shareholders will also be prohibited from bringing class actions against the firm or its management.
Bruce Herbert, CEO of Newground Social Investment, described the plan as unprecedented for creating a total lack of accountability by closing the voting door, the courthouse door and the proposal door simultaneously. Newground previously challenged Tesla's use of a Texas law that bars investors from filing shareholder resolutions unless they own at least $1 million of stock. Following a January 2024 Delaware court ruling that voided Musk's $55.8 billion pay package due to board conflicts of interest, Tesla relocated its headquarters to Texas.
SpaceX has also relocated its headquarters to Texas to utilise state laws that protect against activist investors and hostile takeovers. The state's securities laws reportedly make it harder for challengers to run proxy contests or remove officers, directors and management. The firm is taking advantage of largely untested new governance laws to limit shareholder rights while moving forward with a confidential IPO filing.
Although the SpaceX IPO appears to be unusually restrictive, investors are likely to buy in given the scale of the deal. The structure effectively ensures that the only person who can fire Musk is Musk himself, who will retain majority control through supervoting shares even after the company goes public.
