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Treasury Inc. 2.0: The Renewed Challenges of Sovereign Controlling Shareholders at the Commerce Department

Author(s):
J.W. Verret
Posted:
11-2026
Law & Economics #:
26-20

ABSTRACT:

Is the U.S. government a controlling shareholder in Intel? The simple answer from Delaware law is likely no. The Commerce Department has agreed in writing to vote its shares in favor of board nominees and board recommendations. Under the definition of “controlling stockholder” in 2025 reforms to the Delaware General Corporation Law this fact pattern is not treated as a controlling shareholder.
This is the kind of relationship that in any other context would be considered a conflicted controlling shareholder arrangement and/or a related party transaction. After all, the Commerce Department controls the grant agreement related to Intel and under which Intel could draw further funds. The Commerce Department further controls the export licenses that Intel and its customers frequently need. Lay viewers of the events of August 2025 may see a different reality of government leverage over Intel. That gap is the subject of this paper.
Corporate and securities law is no more ready for the presence of a controlling, sovereign immune government shareholder than it was in 2010 when I wrote the first version of this paper. In this paper, I review lessons learned from the government ownership in the bailout of 2008, the litigation that followed, and my predictions (some accurate, some erroneous) from my 2010 piece to contribute insights into the problems that may result from this second wave of government controlling shareholder stakes in tech firms as a policy goal of the Trump administration.
This paper explores two ideas. The first and most important is to diagnose the issue. Corporate law is focused on the problem of controlling shareholders that at times abuse their power to the detriment of the rest of the shareholder base. These areas of law are nevertheless not well equipped to address much less measure the indirect and at times subtle control that accompanies sovereign government shareholders. Delaware’s corporate law governing conflicted controlling shareholders barely sees the control of the sovereign shareholder. Why worry about notice and comment rulemaking when as a controlling shareholder you can call the CEO on the phone and make your influence felt? This newer 2025 government ownership program has thirty-odd firms, no expiration date on the government’s purchase authority (and in some cases, arguably no authority), no warrants that eventually force a decision about what to do with the investment, no TARP Inspector General with criminal investigative authority, and no defined plaintiff with a pathway to challenge conflicted decisions or force exit of the position.
The second half of this article reaches for a remedy. This paper has shown that state corporate law is ill equipped to police conflicts of interest by sovereign shareholders. A mandatory exit may be the best and simplest limitation on that risk. The first recommendation is a mandatory exit provision. Every position expires after a certain timeframe and the expiration takes an act of Congress to momentarily delay it in the event of an emergency. The second recommendation is that equity ownership needs to be recognized accurately in the federal budget and in congressional scoring for credit programs. Then finally, in the event the government breaches these requirements, a private party needs express standing to sue to enforce the provisions. Enforcement of the exit was proposed in 2010, and proposed again in 2021 in a paper about the Federal Reserve’s emergency lending, and neither proposal was taken up but it is not too late.