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Just like many of us from the outside, the question of who really controls Tesla, Inc. might not be a big deal to us because obviously, Elon Musk seems to be the figurehead that everyone can term the EV automaker with but there is also the more legal side of things as to whether Elon Musk acts on his own or he’s just according to instructions from the firm hence the question who really controls Tesla?

Speaking of who controls what, Tesla’s shareholder alleged that Elon Musk used his control on Tesla to save SolarCity back in 2016 from bankruptcy because the billionaire has poured in tons of cash another forms of investments into the business.

However, the union pension funds and asset managers which are leading the case against Musk are requesting the SpaceX CEO repay to Tesla the cost of the US$2.6 billion deal and to disgorge the profits on his SolarCity stock and if they are able to pull the case off, it will then become one of the largest judgements against an individual.

The trial will take about two weeks in the Court of Chancery in Wilmington, Delaware and will drill down to whether Elon Musk who as at the time of the deal owned a total stake of 22% of Tesla stock controls the firm or the stockholders who do not hold much stake at the company.

“I think it’s going to be very hard for the court to ignore the reality that Elon Musk is Elon Musk and his relationship with Tesla,” said Ann Lipton, a professor at Tulane University Law School.

She further added the fact that Elon Musk has a celebrity status and his personal ties to Tesla board members as well as their financial ties to SolarCity.

“Put it all together, and it might be enough to count as a controlling shareholder,” she said.

Elon Musk engages with his millions of followers across social media channels and he ultimately dominates the company’s image making him seem like the alpha and the omega of Tesla, Inc.

“We are highly dependent on the services of Elon Musk, Technoking of Tesla and our Chief Executive Officer,” said Tesla’s 2020 annual report.

Plaintiffs allege that Musk drove the negotiations and even pushed Tesla’s board to raise, not lower, the price for SolarCity which in turn benefited Musk who owns the largest shares of SolarCity stocks with about 22% as well as four other Tesla’s board members who in one way or the other own SolarCity stock according to the court records.

Board members settled allegations against them last year for $60 million and did not admit to any fault.

Plaintiffs also allege the deal benefited two of Musk’s cousins who founded SolarCity, saving a company that was rapidly running low on cash.

According to Elon Musk, he made it known that he was fully recused from the board negotiations and that shareholders decided to vote and approve the deal because it was central to his Master Plan that is aimed at integrating sustainable solar energy with electric self-driving cars.

He has said that what plaintiffs see as evidence of control is little more than strong management.

“Taken to its natural conclusion, virtually all ‘hands-on’ and ‘inspirational’ CEOs with minority stock ownership would be deemed controllers,” Musk’s lawyers wrote in a court filing.

If Vice Chancellor Joseph Slights determines Musk was a controlling shareholder, it will fall to Musk to prove the SolarCity deal met the high bar of the “entire fairness” standard, which examines process and price, said legal experts.

Elon Musk in court papers also made it known that the SolarCity deal has been a huge success for Tesla shareholders which demonstrates the deal was not only fair but a boon.

Tesla eventually split its stock 5-1 back in 2020 which has risen to US$652 on Thursday from near US$37 a share when the deal closed in November 2016.

“If the vice chancellor thinks this deal was awful and was not effectively negotiated on behalf of the company, he’ll strike it down,” said Larry Hamermesh, a professor at Delaware Law School.