For generations, Delaware served as the default home for corporate charters, thanks in part to its specialized Court of Chancery and a deep body of case law, leading to more predictable judicial outcomes. At the turn of the 20th century, Delaware took over New Jersey’s role as the leading state for incorporations after Woodrow Wilson passed antitrust laws designed to thwart monopolies.[i] Previously, Delaware had modeled its corporate statutes after New Jersey’s regime. Eventually, Delaware dominated all others as the favored state for incorporation.[ii] It cemented this dominance with a framework of low franchise taxes, efficient and accessible corporate division at Delaware’s Secretary of State, a specialized “Court of Chancery” for corporate disputes (with cases outcomes determined by judges), and Delaware’s favorable corporate law regime.
For years, incorporating in Delaware was almost reflexive. People just did it. Even in circumstances where it didn’t make good sense. But Delaware’s long-standing dominance is now under significant pressure. We may be witnessing a “realignment” of how people think about state of formation decisions. Many commentators have noted an acceleration in the so-called “DExit” movement: companies choosing to reincorporate in other states.
Several high-profile companies have left Delaware, with their stated reasons including greater certainty, stronger director protections, and better alignment between their states of incorporation and decisions-making headquarters or operations. For example, litigating disputes in Delaware courts can make little sense for companies whose management activities or operations center around Houston, DFW, San Antonio, or Austin. Local witnesses, documents, and key business relationships are far more accessible in Texas venues, and the practical burdens of out-of-state litigation add unnecessary cost and distraction—including the requirement of hiring counsel licensed in Delaware, which is a challenging prospect for out of state attorneys.[iii]
Further, recent Delaware decisions, particularly those involving executive compensation and conflicted transactions, have prompted questions concerning whether Delaware’s balancing of stakeholder interests has tipped too far toward shareholder activism and judicial second-guessing. The most famous recent example is perhaps the case of Elon Musk’s judicial woes concerning his Tesla compensation package, which ultimately led to Tesla’s abandonment of its Delaware domicile.[iv]
While Delaware responded with legislative adjustments, the momentum toward alternatives like Texas continues to build. Many companies are choosing Texas as the place of legal domicile and Texas is doing its best to court them.[v]
Companies That Have Chosen Texas
Several prominent companies have already made the move or signaled their intent to reincorporate in the Lone Star State:
- Tesla, Inc.—in 2024[vi]
- SpaceX — also in 2024 after a Tesla ruling adverse to Elon Musk.[vii]
- Coinbase Global — Completed its transition in late 2025, prioritizing predictability.
- Dell Technologies — Announced planned departure in May 2026 with shareholder vote scheduled for June, highlighting reduced litigation risks.[viii]
- ExxonMobil — Redomiciled to its operational headquarters in Texas last month (May of 2026).[ix]
Other companies that have chosen Texas and are near or have finalized their reincorporation include Dillard’s, Inc., FirstCash Holdings, EquipmentShare, ArcBest, and Voyager Technologies. Several companies have described their choice as driven by a desire for Texas’s more predictable, management-friendly legal frameworks and the reduction of frivolous, fee-driven shareholder litigation. These moves involve significant market value and reflect a strategic reassessment rather than a knee-jerk reaction, but they may also be encouraged somewhat by today’s polarized and fractious political environment.[x]
Why Texas? The Pull Factors
Texas courts companies to reincorporate through a combination of updated statutes, judicial infrastructure, and economic advantages.
Stronger Director Protections and Predictable Corporate Law
Recent amendments to the Texas Business Organizations Code have reinforced the business judgment rule and offer clearer safe harbors for board decisions.[xi] Governance documents enjoy flexibility, including options for exclusive forum provisions and jury-trial waivers in internal disputes. This framework aims to curb opportunistic litigation while preserving accountability.
Tax and Business Climate Advantages
Texas does not have a state income tax, which is a big selling point for executives and for attracting talent. This is a deeply engrained policy which does not seem likely to change in the near future. Additionally, Texas levies a modest franchise tax (calculated on margin rather than net income) and a meaningful no-tax-due threshold of $2.65 million in annualized revenue. It also has a regulatory environment many view as supportive of innovation and growth—which is particularly attractive for energy, tech, logistics, and crypto businesses. Especially to those already rooted here.
The Texas Business Court: Jurisdiction and Future Plans
A cornerstone of Texas’s corporate appeal is its dedicated Business Court system, which launched in 2024, making Texas the 31st state to establish a specialized business court.[xii] The statutory framework received significant enhancements during last year’s legislative session.[xiii] These courts feature judges with deep experience in complex commercial matters—typically at least ten years in relevant practice—and handle cases with an emphasis on efficiency and consistency.[xiv] Appeals in cases involving over $10 million are routed to the specialized Fifteenth Court of Appeals.[xv]
Jurisdiction Highlights:
$5 Million Threshold: Most qualifying actions (corporate governance, certain transactions, fiduciary claims, securities matters, derivative suits, and actions under the Business Organizations Code and other statutes) require an amount in controversy exceeding $5 million (excluding interest, attorney fees, penalties, etc.). Parties can aggregate claims from joined parties and a series of related transactions to meet this threshold.
Public Companies: No dollar threshold applies to certain governance and securities claims if a party is publicly traded.
Broader Scope: Expanded to include intellectual property and trade secret disputes, plus arbitration-related matters (enforcement of agreements, appointment of arbitrators, confirmation or vacatur of awards).
Qualified Transactions: Commercial contracts and deals with aggregate value meeting the threshold qualify, and parties can contractually designate the Business Court as the exclusive forum in governing documents.
Expansion Plans and Momentum:
The legislature continues refining the system to handle higher volume. In 2025 it lowered jurisdictional thresholds and broadened subject-matter coverage precisely to attract more complex disputes and build a robust body of Texas-specific precedent. Additional divisions and procedural tweaks are anticipated as filings grow, which are expected to establish Texas as a credible long-term competitor in the market for corporate charters.
A Note on Investor Preferences: Not One-Size-Fits-All
While Texas law offers management-friendly predictability, the choice of domicile warrants careful consideration based on (and is sometimes dictated by) a company’s ownership structure.
Companies dominated by strong boards or founder/management control may find Texas relatively more appealing than Delaware. Greater deference to business judgment and reduced exposure to certain shareholder suits can provide breathing room for long-term decision-making without constant courtroom distractions.
By contrast, companies reliant on outside venture capital or institutional investors—particularly startups or those with dispersed, remote shareholders—may encounter different dynamics. Powerful investors frequently prefer the higher scrutiny and well-developed fiduciary standards associated with Delaware. Established Delaware precedent offers familiar protections against potential founder overreach or self-dealing, which can be reassuring when capital providers lack day-to-day operational visibility.
That said, hybrid solutions exist. Sophisticated investors and companies seeking to attract capital can contractually import Delaware-law standards, specific fiduciary provisions, or enhanced approval requirements directly into Texas charters, shareholder agreements, or investment documents. Where jurisdictional thresholds or procedural nuances of the Texas Business Court raise concerns, parties can also designate arbitration as an exclusive dispute resolution mechanism (or as an alternative to Texas Business Court jurisdiction)—offering flexibility, confidentiality, and the ability to select decision-makers familiar with desired legal standards.
Looking Ahead
Delaware retains formidable strengths—its precedent library and institutional familiarity remain valuable for many enterprises. Yet incorporation in Delaware is no longer an automatic decision. Boards should evaluate domicile strategically, balancing litigation risk, governance needs, investor expectations, and operational realities. Companies with significant operations or headquarters in Texas should give strong consideration to incorporating in-state, and should seek advice on the same with qualified Texas counsel.
For businesses with Texas ties, the Lone Star State now presents a maturing, forward-looking option. As the ecosystem evolves, expect continued innovation in how companies structure their legal foundations.
[i] https://www.theatlantic.com/magazine/archive/1932/09/why-corporations-leave-home/650269/.
[ii] https://www.nytimes.com/1976/05/09/archives/how-delaware-became-no-1.html.
[iii] https://www.clio.com/resources/bar-reciprocity/de/.
[iv] https://fortune.com/2025/12/20/elon-musk-net-worth-679-billion-fortune-delaware-court-55-billion-tesla-pay-package/.
[v] https://clsbluesky.law.columbia.edu/2025/05/29/how-texas-is-rewriting-the-rules-of-corporate-domiciles/; https://www.kvue.com/article/news/politics/texas-legislature/texas-governor-abbott-signs-bills-attract-businesses-move-headquarters/269-9b39bdb6-70a9-471f-b9cb-79cf4b9ba7b9.
[vi] https://texasstandard.org/stories/tesla-reincorporation-texas-delaware-musk-shareholders/
[vii] https://www.nytimes.com/2024/02/15/business/spacex-delaware-texas.html
[viii] https://investors.delltechnologies.com/news-releases/news-release-details/dell-technologies-board-unanimously-recommends-redomestication
[ix] https://corporate.exxonmobil.com/news/news-releases/2026/0310-redomiciling-the-company-from-new-jersey-to-texas.
[x] https://news.bloomberglaw.com/esg/future-of-dexit-four-factors-driving-state-reincorporations.
[xi] https://corpgov.law.harvard.edu/2025/05/21/texas-corporate-law-changes-challenge-delawares-dominance/.
[xii] capitol.texas.gov/tlodocs/89R/analysis/html/HB00040E.htm.
[xiii] https://www.capitolservices.com/texas-the-new-delaware-for-businesses/.
[xiv] https://news.bloomberglaw.com/legal-exchange-insights-and-commentary/texas-business-court-is-a-powerhouse-for-resolving-civil-disputes.
