Texas, Oklahoma, and Nevada have taken significant legislative steps to attract corporate incorporation and litigation business, challenging Delaware’s long-standing position as the top state for incorporation.
These changes come amid what many are calling a potential “Dexit” — a growing trend of companies reconsidering Delaware as their legal home.
Strategic Reforms in Rival States
In a bid to lure high-value incorporations:
- Texas passed bipartisan legislation to reduce shareholder power and shield corporations from lawsuits, while also enhancing its new business court system.
- Nevada approved updates to its business laws and is moving toward a constitutional amendment to establish a statewide business court.
- Oklahoma’s Legislature authorized business courts in its two most populous counties, part of Gov. Kevin Stitt’s plan to become “the most business-friendly state.”
These moves are fueled by high-profile cases, including the Tesla compensation dispute that prompted Elon Musk to shift incorporation for Tesla and SpaceX to Texas, and Neuralink to Nevada.
Delaware’s Response to ‘Dexit’ Fears
Faced with the threat of losing its $2.2 billion corporate revenue stream, Delaware passed legislation to limit shareholder access to records and increase protections for corporate leaders.
Critics dubbed the move the “Billionaire’s Bill,” arguing it weakens investor rights in response to pressure.
While Delaware Gov. Matt Meyer remains confident in the state’s proven Court of Chancery and its established corporate legal framework, others suggest the loss of predictability in recent rulings is pushing firms away.
Weighing Legal Stability vs. Business Flexibility
Despite their bold reforms, states like Texas and Nevada lack Delaware’s judicial legacy. Experts caution that while their laws may appear more favorable, their courts have limited experience with the complexities of Fortune 500-level litigation.
New policies in Texas, such as requiring shareholders to own at least 3% of a company before filing derivative lawsuits, raise concerns among consumer advocates.
These changes could weaken accountability by making it harder for shareholders to pursue legal action against corporate boards.
The race to attract corporate filings is heating up, with Texas, Oklahoma, and Nevada aggressively reforming their legal systems to compete with Delaware’s long-standing dominance.
While Delaware still hosts over 2 million incorporations, including two-thirds of the Fortune 500, this recent trend could reshape the corporate legal map over the coming years.
Ultimately, businesses must weigh legal reliability against policy flexibility as they decide where to call home.