Is “DExit” real?

INTRODUCTION

For more than a century, Delaware has reigned as the favored domicile for U.S. companies, celebrated for its deep body of corporate law and its specialized Court of Chancery that resolves corporate disputes between sophisticated parties and brings some element of predictability to the application of its corporate law. In recent years, however, a series of high-profile decisions from the Court of Chancery have coincided with (and some might say caused) notable re-domiciliations out of Delaware by Tesla, SpaceX, Dropbox, Tripadvisor, Andreessen Horowitz, and others. Talk of a flight from Delaware, or a “DExit,” followed. Although the absolute number of exits remains modest against Delaware’s vast roster of companies, the directional shift is real and underscores that domicile is no longer a one-size-fits-all decision.

At the same time, two rivals are ascendant. Texas, having launched its statewide Business Court in September 2024, is refining its Business Organizations Code (TBOC) to make it more attractive to companies and laying the groundwork for a Texas-based stock exchange. Nevada, long marketed as management-friendly, has expanded statutory protections for directors and officers and is moving toward a single, statewide business court.

Today, the choice of domicile influences everything from deal timing to litigation exposure and governance risk, and many companies are assessing whether Delaware—which for years was always a given—is the best place to incorporate when going public and some are even contemplating reincorporating to a new state.

KEY TAKEAWAYS

This article compares the shifting jurisdictional landscape, evaluates the comparative strengths and vulnerabilities of Delaware, Texas, and Nevada, and offers practical guidance to boards, investors, and litigators weighing whether to remain in Delaware or to migrate elsewhere. The key practical takeaways are as follows:

• Delaware remains the market standard, backed by unparalleled precedent and recent statutory refinements that heighten predictability.
• Texas offers accelerated procedures, robust board autonomy, and no state corporate income tax, offering issuers swift, contract-based dispute resolution.
• Nevada provides the broadest statutory liability shield and the lowest recurring costs; despite lacking a dedicated business court and facing questions about shareholder safeguards, it is presently the leading destination for companies exiting Delaware.
• Reincorporation is highly fact-specific. Boards should carefully evaluate ownership concentration, transaction pipeline, litigation profile, tax impacts, and the strength of existing charter and bylaw provisions before pursuing a change in domicile.
• Reincorporation requires both board and shareholder approval and invites scrutiny. Early and targeted engagement with key institutional investors is essential to ensure the benefits to stockholders are clearly articulated, which can increase approval odds and can mitigate litigation risk.
• Statutes and case law evolve rapidly. Routine jurisdictional audits are essential to stay ahead of developments in Delaware, Texas, and Nevada.

DELAWARE IN DEFENSE MODE

Delaware’s long-standing position as the de facto default domicile for U.S. public companies is no longer a foregone conclusion. A series of closely watched rulings from the Court of Chancery[1]—including two recent high-profile fiduciary duty disputes discussed below—amplified concerns about whether the state’s vaunted reputation for predictable, expert, and business-minded adjudication is beginning to erode.

The Tornetta decisions. On January 30, 2024, Chancellor McCormick issued a post-trial opinion in Tornetta v. Musk, holding that the defendant CEO—a 21.9% holder of company stock—exercised “transaction-specific” control over the negotiation of his 2018 compensation plan, triggering an entire fairness review despite holding a less than controlling stake in the company.[2] Chancellor McCormick rescinded the USD56 billion, stockholder-approved option grant, prompting the company to quickly reincorporate in Texas and the CEO to publicly urge companies on X (formerly known as Twitter) to “never incorporate your company in the state of Delaware.”

In December 2024, Chancellor McCormick rejected the company’s attempt to ratify the award retroactively—despite the overwhelming approval in a second stockholder vote—and awarded USD345 million in attorneys fees to plaintiff’s counsel.[3] The company, now a Texas corporation, has since proposed a 2025 interim award that is expressly contingent on the outcome of the CEO’s pending appeal to the Delaware Supreme Court.[4] On November 6, 2025, stockholders approved the package,[5] but its effectiveness remains subject to the outcome of that appeal.

The Nevada reincorporation fight. On February 4, 2025, the Delaware Supreme Court reversed the Court of Chancery’s decision in Maffei v. Palkon, ruling that a board’s decision to change the company’s corporate domicile from Delaware to Nevada should be reviewed under the business judgment rule, not the entire fairness standard.[6] While acknowledging that Nevada may be more favorable to boards and controllers, the Supreme Court found that any theoretical reduction in fiduciary exposure derived from reincorporating in Nevada was too speculative to constitute a material, non-ratable controller benefit. Absent a concrete conflict (e.g., pending litigation), an informed stockholder vote was sufficient to invoke business judgment protection. The Supreme Court concluded by reaffirming that “Delaware policy has long recognized the values of flexibility and private ordering. Allowing directors flexibility in determining an entity’s state of incorporation is consistent with this Delaware policy. Declining to second-guess directors’ decisions to redomesticate where there are no concrete, material, non-ratable benefits flowing to the directors or controllers furthers this important policy.”[7]

Legislative reforms. In response to mounting concerns from market participants, and undoubtedly aware that the franchise-tax revenue constitutes roughly 30% of Delaware’s operating budget,[8] the Delaware General Assembly moved swiftly to enact a series of amendments to the Delaware General Corporation Law (DGCL) in 2024 and 2025.

The 2024 amendments: affirmed that the allocation by a board of directors of certain corporate decision-making authority to stockholders in stockholder agreements is permissible in Delaware; authorized boards to approve draft merger agreements where non-material terms have not yet been finalized; and expressly allowed parties to incorporate a “lost premium damages” provision in a merger agreement.[9] The 2025 amendments made significant changes with respect to “controlling stockholder” law in Delaware—setting a floor of at least 33% ownership, plus the practical ability to exercise effective control—created bright-line safe harbors for conflicted transactions, narrowed and codified the scope of books-and-records inspection rights, and tightened derivative-pleading standards.[10]

Potential conflict with mandatory arbitration provisions. In September 2025, the SEC announced a significant policy shift, stating that the presence of mandatory arbitration provisions for federal securities law claims will not impact decisions whether to accelerate the effectiveness of securities act registration statements. In so doing, the SEC noted that the recent amendment to DGCL § 115(c)—which requires forum selection provisions in Delaware company charters or bylaws to preserve access to at least one court in the State of Delaware—may conflict with the SEC’s position. Other states, like Texas and Nevada, do not have comparable statutory requirements.[11]

Ultimately, whether “DExit” is real, and, if so, whether amendments to the DGCL resolve companies’ concerns, remains unclear. What is clear is that Texas and Nevada are attempting to capitalize on this perception of volatility and inflexibility, positioning themselves as havens of certainty and managerial discretion even as Delaware strives to recalibrate.

TEXAS: THE LONE STAR OFFENSIVE

Texas has moved rapidly to position itself as an attractive alternative to Delaware. Driven by pro-business legislature, the creation of the Texas Business Court, and targeted amendments to the TBOC, Texas now offers corporate stakeholders a forum that is intended to be commercially sophisticated and procedurally efficient.

Texas Business Court. Texas House Bill 19 established the Texas Business Court, an 11-division trial court with subject-matter jurisdiction over internal governance, fiduciary duty, derivative, and certain securities claims. Five divisions began operations on September 1, 2024, each led by an appointed judge with at least ten years of complex business-law experience.[12] In its first year, 192 cases were filed, 42 written opinions were issued, and 25 appeals had reached the new business docket of the Fifteenth Court of Appeals.[13]

Early jurisprudence. The Business Court’s most instructive case to date—Primexx Energy Opportunity Fund, L.P. v. Primexx Energy Corporation—illustrates the court’s style and efficiency. Filed in October 2024, the suit alleged that Blackstone-affiliated general partners orchestrated a squeeze-out that forced minority unitholders to redeem their interests at an unfairly discounted price. In only nine months, Judge Bill Whitehill convened eight hearings, issued five substantive opinions comprising a total of 172 written pages, ultimately held that TBOC Chapter 152 replaces common law fiduciary duties,[14] and enforced the partnership agreement’s drag-along and exculpatory clauses exactly as written,[15] reflecting a Delaware-style emphasis on freedom of contract—albeit on a more expedited timetable.

Legislative reinforcement. The 2025 legislature enacted several targeted amendments to complement its new court, including, without limitation, the following:

• Senate Bill 29 codifies the business judgment rule for all entity types, supplying a uniform, statutory standard that indisputably applies to all Texas entities, permits corporations to set ownership thresholds (up to 3%) for derivative actions, and expressly authorizes jury trial waivers in internal affairs disputes.[16] Under the amended Section 21.218 of the TBOC, a shareholder’s right to make records demands no longer includes access to emails, texts, social media posts or similar electronic communication unless those communications effectuate an official corporate action. In addition, 21.218(b-2) provides a mechanism to object to books and records demands made in connection with litigation.
• Senate Bill 1057 imposes stricter requirements for shareholder proposals at Texas-incorporated, publicly traded issuers.[17]
• Senate Bill 2411 extends officer exculpation for monetary damages (except for breaches of the duty of loyalty) and permits boards to approve merger agreements in “financially final form.”[18]
• House Bill 40 broadens Business Court jurisdiction, lowers monetary thresholds for jurisdiction of a broader set of claims, and streamlines establishing jurisdiction in the Texas Business Court.[19]

Outlook. Recent developments, viewed alongside the absence of a state corporate income tax, a streamlined regulatory environment, and other pro-business incentives, position Texas as an increasingly credible domicile. It is too soon to predict a broad re-domiciliation trend, but an increasing number of companies that are considering going public—particularly in light of the Texas Stock Exchange’s recent SEC approval to operate as a national securities exchange[20]—are seriously considering Texas as a possible alternative.

NEVADA: THE MANAGER’S ALTERNATIVE

For over two decades, Nevada has cultivated a reputation as a management-friendly forum, marketing modest franchise taxes, comparatively low annual fees, specialized business court divisions, and statutory protections for directors and officers that are among the most expansive in the country. Recent legislative and judicial activity has sharpened that pitch, resulting in another credible alternative to Delaware.

Nevada’s judicial business divisions. Nevada’s business-specific dockets, operating since 2000 in Las Vegas and Reno, already offer expedited handling of complex commercial disputes overseen by elected judges. In 2025, the Nevada Legislature approved Assembly Joint Resolution 8, which, if approved during the 2027 legislative session by voters, would establish a dedicated business court with appointed judges and exclusive original jurisdiction over complex business disputes.[21] The Nevada Supreme Court would serve as the exclusive appellate forum, and a commission has already been convened to draft uniform procedural rules.[22]

Legislative reforms. Nevada accelerated its management-friendly trajectory with the enactment of Assembly Bill 239 (AB 239) in May 2025, delivering targeted amendments to the Nevada Revised Statutes (NRS) that directly impact M&A litigation and internal governance disputes.[23] AB 239 codifies a broad business judgment rule, insulating directors and officers from liability except in cases of intentional misconduct, fraud, or knowing violation of law—protections that exceed those available under Delaware or Texas law.[24] It also declares that stockholders, absent control status, owe no fiduciary duties to the corporation or to one another, and even controlling stockholders enjoy a presumption of fairness if conflicted transactions are approved by disinterested directors.[25] AB 239 further authorizes corporations to require bench trials in internal affairs disputes[26] and, absent extraordinary circumstances, confines post-closing merger challenges to statutory appraisal.[27]

Early jurisprudence. In Silva v. Clay, the Nevada court extended AB 239’s business judgment liability shield to limited liability company managers whose operating agreements impose fiduciary duties and strictly enforced the agreement’s narrower, partly-crafted exculpation clause to the letter, illustrating a contract-centric, pro-management approach.[28]

Outlook. Nevada’s effort to rival Delaware will ultimately turn on the depth, coherence, and predictability of the case law that emerges under AB 239 and its future business court, as well as on whether investors embrace a governance regime that places greater faith in managerial business judgment.

JURISDICTIONAL MOVEMENT: CURRENT TRENDS

Notwithstanding the noise around a so-called “DExit,” the available data reveals a more nuanced reality. During the 2025 proxy season, boards and shareholders exhibited heightened—though hardly runaway—interest in revisiting the choice of Delaware as a corporate domicile. By mid-2025, at least 29 companies had proposals involving Delaware: 18 proposals to leave, 11 to enter.[29] The outbound proposals are concentrated among issuers with controlling or highly concentrated ownership structures, a group particularly attuned to shifts in Delaware’s corporate jurisprudence.

Nevada is so far the chief beneficiary of DExit-motivated moves. Between 2024 and mid-2025, a wave of high-profile names—including Tripadvisor, Dropbox, Roblox, Andreessen Horowitz, AMC Networks, MSG Sports, MSG Entertainment, Neuralink, Sphere Entertainment, The Trade Desk, Pershing Square, Jade Biosciences, Tempus AI, XOMA Royalty, Fidelity National Financial, and Affirm Holdings—opted to reincorporate in Nevada. The July 2025 announcement by Andreessen Horowitz proved especially influential: the firm not only announced its own shift but publicly urged its portfolio companies to follow suit, citing: (a) a perceived rise in subjectivity within the Delaware Court of Chancery; (b) the costs and delays inherent in Delaware litigation; (c) heightened personal exposure for directors; and (d) the relative clarity and breadth of Nevada’s codified business judgment rule.[30]

Texas, while attracting fewer departures than Nevada, is gaining momentum. By September 2025, Tesla, SpaceX, Zion Oil & Gas, and Dillard’s, Inc. had completed reincorporations from Delaware to Texas.[31] On November 12, 2025, Coinbase disclosed in a regulatory filing that it will reincorporate from Delaware to Texas, citing Texas’s increasingly code-based corporate law, a more predictable and less litigious forum, strong statewide support for blockchain and crypto, and cost savings from avoiding Delaware franchise tax.[32] Coinbase acknowledged the comparative uncertainties—most notably that key amendments to the TBOC are new and still being interpreted, that business-court precedent is nascent, and that proxy advisors or shareholders may scrutinize the change—but concluded that Texas better aligns with the company’s mission and long-term strategy.

Other large-cap issuers, including Walmart and Meta, are reportedly evaluating similar options.[33]

Across jurisdictions, the principal catalysts for reincorporation remain consistent: greater predictability in corporate governance standards,[34] reduced exposure to shareholder litigation, particularly derivative suits and M&A challenges,[35] and lower franchise taxes and annual fees.[36]

Despite these headlines, Delaware still hosts over 2.1 million active business entities, including approximately 67% of Fortune 500 companies, and more than 80% of 2024 IPOs chose Delaware as their place of incorporation.[37] Outbound transactions, while more visible than in prior years, constitute only a tiny fraction of the state’s corporate base.

---

1See, e.g., W. Palm Beach Firefighters’ Pension Fund v. Moelis & Co., 311 A.3d 809 (Del. Ch. 2024); Sjunde AP-Fonden v. Activision Blizzard, Inc., No. 2022-1001-KSJM, 2024 WL 863290 (Del. Ch. Feb. 29, 2024) (as corrected Mar. 19, 2024); Crispo v. Musk, 304 A.3d 567, 584 (Del. Ch. 2023).(go back)

2Tornetta v. Musk, 310 A.3d 430, 520 (Del. Ch. 2024).(go back)

3Tornetta v. Musk, 326 A.3d 1203, 1264 (Del. Ch. 2024).(go back)

4Tesla, Inc., Current Report (Form 8-K) (Aug. 4, 2025), available at https://www.sec.gov/ix?doc=/Archives/edgar/data/0001318605/000110465925073263/tn2522385d1_8k.htm(go back)

5Tesla, Inc., Current Report (Form 8-K) (Nov. 7, 2025), available at https://www.sec.gov/Archives/edgar/data/1318605/000110465925108507/tn2530590d1_8k.htm(go back)

6Maffei v. Palkon, 339 A.3d 705, 742 (Del. 2025) (reversing 311 A.3d 255 (Del. Ch. 2024)).(go back)

7Id. at 744 (citing Salzberg v. Sciabacucchi, 227 A.3d 102, 116 (Del. 2020) (“[T]he DGCL allows immense freedom for businesses to adopt the most appropriate terms for the organization, finance, and governance of their enterprise.”)).(go back)

8Del. Off. of Mgmt. & Budget, Comprehensive Annual Financial Report (2024), at 30 (reporting franchise-tax receipts constituting approximately 30% of General Fund revenue).(go back)

9S.B. 313, 152nd Gen. Assemb. (Del. 2024) (clarifying contractual enforcement rights under merger agreements, permitting board approval of agreements lacking immaterial terms, and authorizing pre-closing remedies). For further discussion […] see Romain Dambré, Mallory Toson Hoggatt and Samantha Peppers, The Evolution of Delaware Corporate Law […], 42 RTDG No. 3: Doctrine (2024), […].(go back)

10S.B. 21, 152nd Gen. Assemb. (Del. 2025) (amending DGCL §§ 102, 109, 141, 147, 220, 261, 327 et al.); S.B. 95, 153rd Gen. Assemb. (Del. 2025); see also Press Release, Matt Meyer, Governor, Delaware, Governor Meyer Signs SB21 Strengthening Delaware Corporate Law (Mar. 26, 2025) […]. The amendments are currently subject to constitutional challenges in Plumbers & Fitters Local 295 Pension Fund v. Dropbox, Inc., C.A. No. 2025-0354-KSJM (Del. Cir. June 9, 2025) and Rutledge v. Clearway Energy Group, LLC, C.A. No. 2025-0499-LWW (Del. Cir. June 6, 2025).(go back)

11U.S. Sec. & Exch. Comm’n, Acceleration of Effectiveness of Registration Statements of Issuers with Certain Mandatory Arbitration Provisions (Sept. 17, 2025), available at https://www.sec.gov/files/rules/policy/33-11389.pdf; see also A&O Shearman, “SEC Will No Longer Object to Provisions Requiring Investors to Arbitrate Securities Law Claims,” (Sept. 24, 2025), available at https://www.aoshearmann.com/en/insights/sec-will-no-longer-object-to-provisions-requiring-investors-to-arbitrate-securities-law-claims.(go back)

12Tex. Gov’t code § 25A.009. The remaining divisions of the Business Court will not have an appointed judge until at least July 1, 2026. The divisions are located in Dallas, Travis, Bexar, Tarrant, and Harris counties.(go back)

13See Business Court: Opinions, TEX. JUD. BRANCH, https://www.txcourts.gov/businesscourt/opinions.(go back)

14Primexx Energy Opportunity Fund, L.P. v. Primexx Energy Corp., 709 SW.3d 619 (Tex. Bus. Ct. Mar. 10, 2025), reconsideration denied, 713 SW.3d 416 (Tex. Bus. Ct. Apr. 15, 2025).(go back)

15Primexx Energy Opportunity Fund, L.P. v. Primexx Energy Corp., 24-BC01B-0010, 2025 WL 1479394 (Tex. Bus. Ct. May 22, 2025).(go back)

16S.B. 29, 89th Leg., Reg. Sess. (Tex. 2025) (amending Tex. Bus. Orgs. Code §§ 21.401–563).(go back)

17S.B. 1057, 89th Leg., Reg. Sess. (Tex. 2025) (adding Tex. Bus. Orgs. Code § 21.71).(go back)

18S.B. 2411, 89th Leg., Reg. Sess. (Tex. 2025) (amending Tex. Bus. Orgs. Code §§ 21.053, 21.056).(go back)

19H.B. 40, 89th Leg., Reg. Sess. (Tex. 2025) (amending Tex. Gov’t code § 25A.002).(go back)

20Press Release, TXSE Group Inc., TXSE Group Inc Announces SEC Approval of Texas Stock Exchange (Sept. 30, 2025), https://www.txse.com/press-releases/txse-group-inc-announces-sec-approval-of-texas-stock-exchange.(go back)

21A.J.R. 8, 83rd Leg., Work Sess. (Nev. 2025), leg.state.nv.us/Session/83rd2025/Bills/AJR/AJR8_EN.pdf.(go back)

22Press Release, Nevada Supreme Court, Commission to Enhance Nevada Business Court (Mar. 7, 2025), nvcourts.gov/aoc/aoc_news/nevada_supreme_court_to_create_commission_to_enhance_nevada_business_court.(go back)

23A.B. 239, 83rd Leg., Work Sess. (Nev. 2025).(go back)

24NRS § 78.138(7) (amended 2025).(go back)

25Id. at § 4 (amending NRS § 78.240); see also NRS § 78.423 (definition of “controlling stockholder”).(go back)

26A.B. 239 § 2, 83rd Leg., Work Sess. (Nev. 2025) (amending NRS § 78.046(4)).(go back)

27A.B. 239 § 2, 83rd Leg., Work Sess. (Nev. 2025) (amending NRS § 79A.380(2)).(go back)

28No. A-25-909767-B (Nev. Dist. Ct. Dep’t IX July 3, 2025).(go back)

29ISS Governance, The U.S. Reincorporation Race: Who’s in the Lead?, ISS: Insights (July 16, 2025), insights.issgovernance.com/posts/the-u-s-reincorporation-race-whos-in-the-lead/; See also […] (various SEC filings).(go back)

30Jai Ramaswamy, Andy Hill and Kevin McKinley, Andreessen Horowitz, We’re Leaving Delaware, and We Think You Should Consider Leaving Too (July 9, 2025), available at https://af62.com/were-leaving-delawares-and-we-think-you-should-consider-leaving-too/.(go back)

31See Zion Oil & Gas Inc., Current Report on Form 8-K (June 4, 2025), […] Tesla, Inc., Current Report on Form 8-K (June 13, 2024), […] Dillard’s, Inc., Current Report on Form 8-K (Aug. 19, 2025), […] Michelle Chapman, Musk Pushes Forward on Transfer of Legal Home for SpaceX from Delaware, to Texas, AP News (Feb. 15, 2024), […].(go back)

32Coinbase Global, Inc., Information Statement (Schedule 14C) (Nov. 24, 2025), available at https://www.sec.gov/Archives/edgar/data/1679788/000167978825000227/c0in-def14cinformationstat.htm.(go back)

33Evan Palmer, Delaware Faces Exodus of Tech Companies, Newsweek (Feb. 1, 2025), https://www.newsweek.com/delaware-exodus-tech-meta-dropbox-elon-musk-2024596.(go back)

34Stephen M. Bainbridge, DExit Drivers: Is Delaware’s Dominance Threatened?, Harv. L. Sch. F. on Corp. Governance (Sept. 6, 2024), https://corpgov.law.harvard.edu/2024/09/06/dexit-drivers-is-delawares-dominance-threatened/; See also, e.g., Dropbox, Inc., Schedule 14C (Feb. 10, 2025), […].(go back)

35Jon Bosworth, Could the Mighty Fall? Why Companies Are Considering Reincorporating Out of Delaware and Delaware’s Response, U.C. Berkeley CTR. for L. & Bus.: Blog (Apr. 14, 2025), […]; See also, e.g., Madison Square Garden Sports Corp., Schedule 14A (Apr. 23, 2025), […].(go back)

36See Mingson Lau, Texas, Oklahoma and Nevada Make Changes to Lure Business amid Delaware’s Dexit Concern, AP News (June 23, 2025), […]; See also, e.g., TripAdvisor, Inc., Schedule 14A (Apr. 25, 2023), […].(go back)

37See Charuni Patibandla-Sanchez and Kris Knight, Annual Report Statistics, Del. Div. of Corps. (2024), available at https://corp.delaware.gov/stats.(go back)