Daily Journal: Delaware Fights to Keep its Corporate Crown Amid the Rising ‘DExit’ Trend

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Delaware is pushing back.

Long the dominant jurisdiction for corporate incorporation, the state is moving aggressively to defend its position against rising competition from Texas and Nevada — two states courting companies to reincorporate.

At the center of Delaware’s response is SB 21, a law designed to limit shareholder access to corporate books and records in support of potential litigation. The legislation also narrows the definition of who qualifies as a controlling shareholder.

In February, the Delaware Supreme Court upheld the law’s constitutionality, and justices also reversed several Court of Chancery rulings that had frustrated corporate leaders.

Joshua D. Geffon, a corporate partner at Fenwick & West LLP in Santa Monica, said the coordinated response from lawmakers and courts sent a clear message.

“It appears that Delaware successfully stemmed the trend by way of its statutory response in 2025 via SB 21 – addressing much of the criticism that was focused upon controlling stockholders and limits on stockholder inspection rights,” he said.

Geffon added that the venture capital community has largely stayed put.

Competition Heats Up

Still, Delaware’s challengers are making inroads.

More than 15 companies reincorporated in Texas and Nevada during the first quarter of the year. At the same time, Wilson Sonsini Goodrich & Rosati PC has strengthened its Nevada capabilities by hiring a prominent law professor to advise clients interested in the state.

Nevada has added seven former Delaware corporations so far in 2026, though it lost one firm – LQR House Inc. – back to Delaware last month. Last year, about 28 companies reincorporated to the Silver State.

Ten companies have reincorporated to Texas so far this year, more than in all of 2025.

The Wilson Sonsini hire is a signal that the socalled “DExit” trend may have staying power, said Gian Brown, a partner at Holland & Hart LLP in Las Vegas.

“They obviously felt they needed to have their own Nevada lawyer and that’s an interesting development,” Brown said.

The new hire, Benjamin P. Edwards – also an associate dean and professor of corporate governance at UNLV’s William S. Boyd School of Law – framed the move as an opportunity to guide clients through a shifting landscape.

“With Nevada playing an increasingly significant role in the corporate ecosystem, I look forward to advising clients incorporated in the state and helping them approach governance decisions thoughtfully, strategically and with a long-term perspective,” Edwards said in a statement upon joining the firm as senior counsel in March.

The “DExit” Debate

High-profile departures from Delaware, including Tesla Inc. and Coinbase Inc., have fueled the DExit discussion, which has drawn significant media attention.

What was once a routine decision – where to incorporate – is now being reconsidered.

Since the 1980s, Delaware has been the default choice for most companies, thanks to its experienced judiciary and efficient handling of corporate disputes. That assumption is now being tested.

Mallory Tosch Hoggatt, a partner at Allen Overy Shearman Sterling LLP in Houston, said fears of a mass departure are overblown.

“But for new companies, or companies considering an IPO, I do think the conversation of where they want to be incorporated, I think that question is more open than it has been,” she added.

“I expect that is here to stay.”

Different Strategies, Same Goal

Texas and Nevada are taking distinct approaches in their push to attract incorporations.

Texas is positioning itself as a full-service corporate hub, combining incorporation with headquarters relocation and a newly created business court.

State officials also are persuading companies, such as ExxonMobil Corp. – which already is based in the Lone Star State – to reincorporate there. The oil giant has been incorporated in New Jersey.

Nevada, by contrast, is focused on incorporation alone – emphasizing low fees and a management-friendly statutory framework.

State lawmakers in Nevada hope to establish a dedicated business court as well, though that effort is unlikely to materialize before next year. For now, elected judges continue to handle business dockets.

Earlier this month, Pershing Square Capital Management LP – run by investor Bill Ackman – proposed acquiring Universal Music Group and reincorporating it in Nevada.

Delaware Holds its Ground

Despite the increased competition, many attorneys say Delaware remains firmly entrenched.

The state, which relies heavily on corporate franchise fees, saw a 30% increase in new corporations last year.

Brian M. Rostocki, a partner at Reed Smith LLP in Delaware, said he does not see an ongoing wave of departures, particularly among private companies.

“I don’t think [Texas and Nevada] are a real serious threat to Delaware,” he said, adding that recent legislative action has strengthened the state’s position by showing “it can move efficiently and effectively when they need to.”

Even so, Delaware’s near-monopoly may be a thing of the past.

Attorneys say the state is no longer the automatic choice and will increasingly have to compete to remain on top.