In 2025, a growing trend began to reshape the landscape of U.S. corporate law, with a notable shift away from Delaware as the preferred state for company incorporation. Delaware has long been the dominant state for corporate formation, thanks to its well-established legal framework and favorable business laws. However, the so-called “Delaware corporate exodus” has gained momentum, driven by a range of concerns among executives, particularly dissatisfaction with the state’s evolving judicial decisions and growing fears about litigation risks and governance unpredictability.
By late 2025, a significant number of U.S. public companies with market valuations above $1 billion had made the decision to reincorporate in other states, including Texas and Nevada. This marks a dramatic departure from Delaware’s central role in corporate law, where more than half of U.S. public companies had traditionally been incorporated. The companies making the switch are seeking what they perceive as more stable and predictable legal environments, offering more cost-effective governance frameworks and fewer legal complexities. These shifts reflect a desire for a more straightforward, less burdensome regulatory landscape—one that can provide a more favorable environment for conducting business.
The primary driver behind this trend is the perception that Delaware’s judicial system, particularly its Court of Chancery, has become increasingly unpredictable. Executives have expressed concerns about the evolving nature of Delaware’s corporate governance rules and how they may expose companies to greater litigation risks. While Delaware has historically been praised for its well-developed body of corporate law and its business-friendly court system, some recent rulings have left corporate leaders questioning whether they can continue to rely on the state’s legal framework to offer the stability they need to make key business decisions with confidence.
As companies leave Delaware for other states, the issue of legal and governance stability has taken center stage in corporate boardrooms. Proponents of the “corporate exodus” argue that the movement is a natural evolution, pointing out that allowing companies to incorporate in a variety of states creates a more competitive legal environment that can drive innovation and efficiency. These advocates believe that the diversification of corporate law across states could foster more tailored and flexible governance options, giving companies the freedom to select jurisdictions that best suit their needs.
However, critics of this trend raise concerns about the potential long-term impact on corporate governance. They argue that the fragmentation of corporate law could undermine the consistency and uniformity that has been a hallmark of Delaware’s legal system for decades. By allowing companies to choose from a wider array of states, there is a risk of eroding the long-standing legal precedents that have contributed to Delaware’s reputation as a stable and reliable jurisdiction. This could result in a less predictable legal environment for businesses, which might ultimately lead to greater uncertainty and higher costs for corporations navigating the regulatory landscape.
As the trend of companies departing Delaware continues to grow, the debate about the future of corporate law in the United States is likely to intensify. The shift has prompted reflection on the role of Delaware in the broader U.S. business ecosystem and whether its dominance in corporate law will continue or gradually diminish. With more and more businesses opting for other states that promise a more business-friendly environment, the question arises as to whether this trend will have lasting implications for Delaware’s reputation as the cornerstone of U.S. corporate law, or whether it will simply signal the beginning of a more diverse and decentralized landscape for corporate governance in the years ahead.
