Press Release: States Take Aim at Delaware’s Corporate Dominance
CLAYMONT, Del. – In a bid to capture corporate litigation revenue traditionally held by Delaware, lawmakers in Texas, Oklahoma, and Nevada have introduced legislation enhancing their business-friendly environments. Concerned about potential corporate exoduses, Delaware has enacted its own reforms to protect its status as the incorporation capital.
Texas recently established a business court and introduced new laws decreasing shareholder powers while increasing protections for corporate leaders. This legislative drive has garnered bipartisan support, aiming to entice businesses unhappy with shareholder litigation risks. Notably, Elon Musk has publicly favored Texas for business incorporations following a Delaware court ruling against his substantial Tesla compensation package.
Nevada has also ramped up efforts, moving toward a constitutional amendment that would create a dedicated business court. Recent relocation trends show several billion-dollar enterprises, including TripAdvisor and DropBox, shifting their headquarters to Nevada, citing Delaware’s “less predictable” legal outcomes as a motivating factor.
Meanwhile, Oklahoma’s Republican-led government is working to establish business courts in its major counties, aiming to position the state as the most business-friendly in the nation. Governor Kevin Stitt has expressed ambitions to rival Delaware’s long-standing dominance.
In response to "Dexit," Delaware implemented the so-called "Billionaire’s Bill," which strengthens corporate leadership protections and limits shareholder access to records. Critics argue this legislative move undermines shareholder rights.
As legislative changes unfold in these states, business law experts caution against overreacting to threats against Delaware. Despite a few high-profile relocations, over 2 million entities remain registered in Delaware, including two-thirds of the Fortune 500, thanks to its well-respected Court of Chancery and longstanding reputation for handling disputes efficiently.
Delaware officials, including Governor Matt Meyer, remain committed to maintaining their corporate stronghold amid growing competition.
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