In a marked shift from decades of legal tradition, a growing number of U.S. corporations are moving away from incorporating in Delaware, long considered the premier jurisdiction for corporate law. The trend, which has gained momentum throughout 2025, reflects a broader reassessment of legal strategy and governance risk among both public and private companies. This movement, sometimes referred to as the “Delaware exodus” or “DExit,” is prompting serious discussion about the future of corporate governance and the evolving competition among states to attract businesses.
For more than a century, Delaware has held a dominant position in corporate America, home to over 60 percent of Fortune 500 companies and the vast majority of U.S. public companies. Its appeal has long rested on a combination of flexible corporate statutes, well-developed case law, and a highly respected judiciary, particularly the Delaware Court of Chancery. The court’s specialization in business disputes and its ability to issue decisions without juries made it a dependable venue for resolving complex legal matters efficiently. Moreover, Delaware’s General Corporation Law provided clarity and predictability, both highly valued by corporate leaders and legal advisors.
However, recent legal developments have caused many corporate boards and general counsels to rethink Delaware’s advantages. In particular, some of the state’s high-profile court decisions in recent years have heightened perceived risks for directors and executives. Critics argue that Delaware’s courts have become more interventionist, especially in cases involving executive compensation, mergers and acquisitions, and transactions involving controlling shareholders. These developments have fueled concerns about increased litigation exposure and legal unpredictability, especially among companies with active founders or dominant investors.
In response to these concerns, a growing number of companies have initiated or proposed reincorporation in states viewed as more management-friendly. In the 2025 proxy season, corporate governance analysts reported a noticeable surge in reincorporation proposals, with the majority involving moves away from Delaware. Nevada and Texas have emerged as the primary alternatives, each offering distinct legal environments that are attracting interest from boardrooms across the country.
Nevada, in particular, has positioned itself as a low-litigation, pro-management jurisdiction. It imposes fewer disclosure requirements, provides broader protections for directors and officers, and generally places a higher burden on plaintiffs seeking to challenge corporate decisions. These features are seen as especially appealing to companies that prioritize minimizing legal liability and avoiding protracted shareholder disputes. Additionally, Nevada’s franchise tax and filing fees are typically lower than those in Delaware, offering potential financial incentives alongside governance advantages.
Texas has also taken deliberate steps to attract incorporation business. The state has amended its business code to enhance clarity around fiduciary duties and to strengthen protections for directors making decisions in good faith. With a growing economy, a business-friendly political climate, and a large population base, Texas presents a compelling alternative for companies that want their legal domicile to align with their operational or cultural footprint.
Several notable companies have already completed or initiated the process of leaving Delaware. Among them are firms from sectors as varied as technology, travel, and finance, with some citing shareholder approval for the moves. Analysts note that companies with strong founder influence or concentrated ownership are particularly likely to pursue reincorporation, as these governance structures often clash with Delaware’s evolving legal standards around minority shareholder protections and related-party transactions.
While Delaware remains by far the most popular state of incorporation, the growing wave of departures has not gone unnoticed by lawmakers and legal experts within the state. In early 2025, Delaware’s legislature passed a series of amendments to its corporate statutes, aimed at reaffirming its commitment to legal clarity and business flexibility. These included efforts to provide safe harbors for conflicted transactions and to clarify the definition of controlling shareholders—two issues that had been at the heart of recent controversial court rulings.
Nonetheless, it remains unclear whether these legislative changes will be sufficient to stem the tide of reincorporation efforts. The broader trend suggests that corporations are becoming more willing to scrutinize long-standing legal norms and are increasingly tailoring their incorporation decisions to match their specific risk profiles, governance models, and strategic priorities.
The implications of this trend extend beyond individual companies. Legal scholars warn that a significant shift away from Delaware could fragment corporate law across the United States, undermining the national consistency that Delaware’s dominance helped to establish. Others see the trend as a healthy sign of competition, where states are encouraged to innovate and update their legal frameworks in response to the evolving needs of modern businesses.
The rise in corporate reincorporation also presents new challenges for investors, who may need to navigate unfamiliar legal landscapes when evaluating shareholder rights and enforcement mechanisms. Proxy advisory firms and institutional investors have begun issuing detailed guidance on how reincorporation proposals should be evaluated, often emphasizing the importance of understanding the legal differences between jurisdictions and the potential implications for shareholder oversight.
As 2026 approaches, it is evident that the landscape of corporate governance in the United States is undergoing a significant transformation. While Delaware is unlikely to lose its status as a corporate heavyweight overnight, the growing willingness of companies to explore alternatives suggests that its once unchallenged dominance is no longer a given. What emerges in the coming years could be a more competitive, diverse legal environment—one that forces both states and corporations to think more strategically about where and how they do business.
