Governor John Carney of Delaware has officially signed a new law that paves the way for Nikola Corp (NASDAQ:NKLA) to double its existing shares. This significant development allows the electric truck manufacturer to offer shares for sale, generating funds to cover interest payments on debt and provide essential support for the upcoming launch of their hydrogen-powered fuel cell trucks.
The automaker twice has failed to receive enough shareholder proxies to approve an increase of shares from 800 million to 1.6 billion, leading to two adjournments of Nikola’s annual meeting.
Before the rule change, a vote to increase shares required a majority, or about 400M proxies, equal to 50% plus one of all outstanding shares. However, the new regulation requires only a majority of shares voting on the proposal. The Delaware incorporated automaker has said that it already has sufficient votes for the increase under the new law. The next count will take place August 3.
Founder and former Executive Chairman Trevor Milton broke a nearly three-year silence on social media to urge shareholders to vote against the measure or change their votes. Milton faces sentencing on three federal fraud convictions on Sept. 22, and owns about 8% of Nikola shares.
The company is nearing the end of arbitration with Milton concerning the former chairman reimbursing a $125M fine the company agreed to pay to the Securities and Exchange Commission related to Milton’s fraud cases.
Shares of NKLA are up 0.02% in afternoon trading on Wednesday.