Delaware vs. Texas: Reincorporations, Business Courts, and Reforms

The contest between Delaware and Texas corporate law comes down to a trade-off boards are now weighing openly: Delaware offers a century of judge-made precedent and a specialized equity court that scrutinizes conflicted transactions closely, while Texas offers a newer statutory framework that codifies the business judgment rule, restricts shareholder litigation, and channels disputes into its own specialized business court. More than 60 public companies with a combined market capitalization above $3 trillion have reportedly left Delaware in the two years since the Chancery Court voided Elon Musk’s Tesla pay package, and most of the large departures have landed in Texas.¹

What Set the Migration in Motion

In January 2024, Delaware Court of Chancery Judge Kathaleen McCormick voided Elon Musk’s $56 billion Tesla compensation package, finding that Musk was a “conflicted controller” and that the Tesla board had run a “flawed process.”² The ruling applied Delaware’s “entire fairness” standard, which puts the burden on directors and controlling shareholders to prove a conflicted deal was fair on both price and process.

Musk’s public response (“Never incorporate your company in the state of Delaware”) was followed by action.³ SpaceX reincorporated in Texas in February 2024, and Tesla shareholders voted to follow in June 2024.⁴ The Delaware Supreme Court later reversed the rescission of Musk’s pay package in December 2025, calling rescission “an improper remedy,” but the departures had already begun.⁵ The ruling had crystallized a broader anxiety on corporate boards about how Chancery judges might treat controlling shareholders and board decisions.

Which Companies Have Moved

The reincorporation list has grown steadily. As of mid-April 2026, Texas had received nine reincorporation announcements for that calendar year alone, already exceeding its total for all of 2025.⁶ Among the names:

Tesla and SpaceX, both in 2024.
Dell Technologies, whose shareholders approved the move with roughly 97% support on June 25, 2026.⁷
Coinbase Global, which filed with the SEC in November 2025 citing a loss of confidence in Delaware’s judicial environment.⁸
FirstCash Holdings, which completed its reincorporation on June 18, 2026.⁹
ExxonMobil, which announced in March 2026 that it would redomicile from New Jersey to Texas.¹⁰
ArcBest, Texas Capital Bancshares, TTEC Holdings, Dream Finders Homes, Voyager Technologies, eXp World Holdings, Dillard’s, Simon Property Group, The Trade Desk, and Weatherford International have all reincorporated or proposed to move to Texas.⁶

Meta has been reported to be in discussions with Texas officials, though no formal announcement has been made.¹¹

Proxy data from the 2025 season shows what is driving the decisions. About 59% of reincorporation proposals cited the legal environment in the current state, 45% cited lower taxes and fees, and 38% cited litigation risk and director or officer liability. A notable 55% of all proposals came from companies with significant or controlling shareholders, exactly the category Delaware’s Chancery Court had scrutinized most aggressively.¹²

What Texas Built to Compete

Texas didn’t just wait for companies to arrive. The state spent three years constructing the pieces of a rival ecosystem.

The Texas Business Court

Created by House Bill 19 in 2023 and opened on September 1, 2024, the Texas Business Court is a specialized trial forum for complex commercial and corporate governance disputes, modeled in part on Delaware’s Chancery Court.¹³ It operates through 11 divisions across the state. Judges are appointed by the governor to two-year terms with Senate confirmation, and candidates need at least 10 years of experience in complex business litigation, transactional law, or judicial service.¹⁴

In its first year, the court received 185 case filings, disposed of 60 cases (85% within 180 days), and issued 42 written opinions, with corporate governance claims making up 80% of the caseload.¹⁵ Another 141 cases were filed in just the first six months of year two, and the court held its first jury trial in February 2026.¹⁶ House Bill 40, effective September 1, 2025, lowered the amount-in-controversy threshold from $10 million to $5 million and added jurisdiction over intellectual property and trade secret claims.¹³ Appeals go exclusively to the Fifteenth Court of Appeals in Austin.

Statutory Reforms

Alongside the court, the Texas Legislature rewrote key parts of the Business Organizations Code:

Senate Bill 29, signed May 14, 2025, codified the business judgment rule for publicly listed corporations, covering both the duty of loyalty and the duty of care. It requires claimants to plead fraud, intentional misconduct, or knowing violations of law with particularity. It also lets companies designate Texas courts as the exclusive forum for internal entity claims, include enforceable jury trial waivers in their governing documents, and limit shareholder inspection of books and records by excluding emails, texts, and social media from statutory demands.¹⁷
Senate Bill 1057, effective September 1, 2025, allows nationally listed Texas-based corporations to require shareholders to hold at least $1 million in market value or 3% of voting shares, for at least six months, before submitting shareholder proposals.¹⁸
Senate Bill 2411, effective the same day, expanded officer exculpation, letting companies limit officer liability for monetary damages (excluding breaches of loyalty and intentional misconduct), bringing Texas roughly into line with Delaware on that point.¹⁸
SB 1058, effective January 1, 2026, created a franchise tax exemption for stock exchanges operating in Texas.¹⁹

Exchanges and Market Infrastructure

NYSE Texas, a fully electronic equities exchange headquartered in Dallas, launched in 2025. Texas is already the state with the largest number of NYSE-listed companies, representing over $3.7 trillion in market value.²⁰ Nasdaq opened a regional headquarters in Dallas in March 2025.¹⁹ The Texas Stock Exchange received SEC approval on September 30, 2025, and is scheduled to begin trading and listings in 2026.²¹

How the Two States’ Laws Actually Differ

Delaware’s corporate law has been built mainly by judges through case law, which gives its courts wide discretion to scrutinize board conduct and conflicted transactions. Texas has gone the other direction, writing protections for directors and officers into statute and limiting judicial review. For a board deciding where to incorporate, four differences matter most.

Conflicted Transactions and the Standard of Review

In Delaware, a transaction involving a controlling stockholder can trigger “entire fairness” review, requiring the controller to prove the deal was entirely fair on both price and process. Texas’s codified business judgment rule rejects that standard. Courts presume directors and officers acted in good faith, and plaintiffs must plead fraud or intentional misconduct with specificity to overcome the presumption.²²

Books and Records

Delaware law grants all stockholders the right to inspect records for a “proper purpose.” Texas limits inspection to shareholders holding at least 5% of stock or those who have held shares for at least six months, and it explicitly excludes emails, texts, and social media from the definition of inspectable records.¹⁷ Because internal communications are often the strongest evidence in shareholder suits, the restriction materially raises the bar for plaintiffs.

Franchise Taxes

Delaware charges annual franchise taxes up to $200,000, or $250,000 for the largest filers.²³ Texas imposes franchise taxes only on corporations with at least $2.47 million in annualized total revenue, so many smaller entities pay nothing.¹⁰ For large companies, the tax savings alone are modest. The legal framework is the real draw.

Depth of Precedent

Delaware’s biggest advantage is also Texas’s biggest weakness. Delaware has more than a century of judicial opinions interpreting nearly every corporate governance question that arises. The Texas Business Court has issued a few dozen written opinions and is only beginning to build precedent on jurisdictional questions, contract interpretation, and fiduciary duties.¹⁶ Companies moving to Texas are betting that statutory clarity can stand in for case law, at least for now.

Delaware’s Response

In March 2025, Delaware Governor Matt Meyer signed Senate Bill 21, a response designed to blunt the migration. The law makes several changes to the Delaware General Corporation Law:

It narrows the definition of “controlling stockholder” to someone holding at least 50% of shares, or at least 33% plus a managerial role. That threshold would have excluded Elon Musk from being classified as a controlling stockholder in the original Tesla pay case.²⁴
It creates safe harbors so that transactions involving controlling stockholders can get business judgment rule protection if approved by a committee of disinterested directors or ratified by a majority of disinterested stockholders.²⁵
It restricts shareholder books-and-records demands to “core materials,” excluding emails, texts, and other informal communications, and imposes a higher particularity standard.²⁶
It prohibits holding controlling stockholders liable for monetary damages for breaches of the duty of care.²⁴

Critics labeled it the “billionaire’s bill” and noted that it bypassed the traditional review process of the Corporation Law Section of the Delaware State Bar Association.²⁶ Delaware judges have publicly criticized the new statute, and a constitutional challenge to SB 21’s safe harbor provisions is pending before the Delaware Supreme Court.²⁷ The practical effect is that Delaware’s own legislative response has moved its corporate law closer to the Texas model.

How Investors Are Reacting

Shareholder support for reincorporation proposals is softening. Average support dropped from 88.7% in 2024 to 81.1% in 2025.¹² Proxy advisors have split: both ISS and Glass Lewis recommended against ExxonMobil’s proposed move to Texas, and Glass Lewis objected to Tesla’s.²⁸ ISS gave only a “tentative” recommendation in favor of Tesla’s move, conditioned on Texas protections being comparable to Delaware’s at that time.

Dell’s vote illustrates why vote tallies can overstate consensus. The board unanimously recommended the move, citing Dell’s founding in Austin in 1984 and its Texas-based headquarters and workforce.²⁹ It passed with roughly 97% support, but Dell is a controlled company where Michael Dell and Silver Lake hold the majority of voting power, making the outcome essentially predetermined.⁷ That pattern holds across the data: companies with significant or controlling shareholders are disproportionately the ones moving to states with weaker shareholder litigation rights.

Nevada as the Third Option

If you’re weighing Delaware against Texas, Nevada belongs in the picture too. It ranks second behind Delaware in attracting out-of-state incorporations and is in several respects more protective of management than Texas: it codified the business judgment rule earlier, imposes no franchise taxes, limits shareholder inspection rights to holders of 15% or more of outstanding stock, and gives directors “near-absolute latitude” on defensive tactics by using the business judgment rule as the sole standard of review.³⁰ Dropbox, TripAdvisor, Pershing Square, and Andreessen Horowitz have moved there, and Musk relocated Neuralink, X Corp., The Boring Company, and xAI to Nevada.³ Nevada does not yet have a specialized business court with appointed judges; a proposed constitutional amendment to create one would not reach the ballot until at least 2027.³¹ That is Texas’s current edge over Nevada.

Where Things Stand

Between 2024 and mid-2025, 16 public companies with market capitalizations above $250 million reincorporated away from Delaware while only five moved in.²⁷ Delaware corporate franchise tax revenue was flat between December 2025 and March 2026, and the Delaware Economic and Financial Advisory Council projected no growth for fiscal years 2027 and 2028. Franchise revenue accounts for roughly one-third of Delaware’s state budget, an estimated $2.1 billion stream and the state’s second-largest revenue source.³²

Delaware still holds roughly two-thirds of the Fortune 500 and retains advantages no competitor has replicated: the depth of its case law, the speed and expertise of its judiciary, and an entire legal and financial services ecosystem built around its corporate law. For boards and lawyers who want predictability grounded in decades of written opinions, Delaware remains the default. For companies with controlling shareholders, significant insider ownership, or boards concerned about derivative litigation, Texas now offers a credible statutory alternative with its own specialized court. The choice is no longer automatic.

1
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2
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3
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4
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6
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8
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9
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17
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18
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21
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Mayer Brown. Delaware Changes Its Corporate Law: What You Should Know About Senate Bill 21
27
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28
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29
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30
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31
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32
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