A growing number of billion-dollar public companies are seeking to exit Delaware as their legal home, in a movement dubbed “Dexit,” following Tesla’s high-profile reincorporation in Texas last year. According to a Reuters investigation, nine companies valued at over $1 billion each are scheduled to vote on reincorporation proposals in the coming weeks, signaling a potential shift in Corporate America’s longstanding relationship with Delaware.
Since 2023, at least five large companies, including Trump Media & Technology Group, Dropbox, and The Trade Desk, have moved their legal incorporation out of Delaware — primarily to states with less aggressive judicial oversight like Texas, Florida, and Nevada.
Why Companies Are Leaving
At the heart of the exodus is a perception that Delaware’s courts are becoming increasingly litigious and unpredictable, particularly for companies with founders or controlling shareholders. The tipping point came with Delaware’s 2023 court ruling voiding Elon Musk’s $56 billion Tesla pay package, leading Musk to post on X:
“Never incorporate your company in the state of Delaware.”
That same day, Tesla and SpaceX began reincorporation proceedings in Texas.
Companies like Trump Media, now incorporated in Florida, cited Delaware’s “increasingly litigious environment” and pointed specifically to the Musk pay decision as a key reason for their move.
Who’s Next?
Among the companies voting on “Dexit” proposals:
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Simon Property Group – seeking to move to Indiana (vote scheduled this week)
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Roblox – seeking to reincorporate in Nevada, citing legal predictability
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Others unnamed but identified by Reuters as billion-dollar firms
Simon, notably, does not have a controlling shareholder, showing that dissatisfaction with Delaware’s legal climate may be spreading beyond founder-led companies.
The Legal Shift
Delaware courts have long applied strict scrutiny to deals involving controlling shareholders, requiring detailed proof of fairness. But other states like Nevada and Texas apply the business judgment rule, which limits shareholder lawsuits and allows greater deference to board decisions—even those involving self-dealing—as long as there is no fraud.
“It’s actually okay to engage in self-dealing, as long as you don’t lie about it,” said Columbia Law School Professor Eric Talley.
Delaware’s Response
Fearing financial repercussions—since over a third of Delaware’s budget comes from corporate fees—the state passed legislation in March 2024 to:
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Restrict judicial review of certain corporate transactions
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Limit shareholder access to corporate records like emails and texts
Despite these efforts, critics argue that Delaware judges are becoming “activist,” and the state’s commitment to holding insiders accountable could deter companies seeking minimal interference.
“Delaware judges have become kind of activist in nature,” said Eric Lentell, general counsel at Archer Aviation, which is also considering a move to Texas.
Meanwhile, Texas Governor Greg Abbott just signed a pro-corporate law amendment allowing companies to set minimum ownership thresholds for shareholder lawsuits—a direct response to the Musk case, which was brought by a plaintiff owning just nine shares.
By the Numbers
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In 2024, for the first time, more companies left Delaware than joined it, according to ISS-Corporate.
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Yet, 62% of Russell 3000 companies were still incorporated in Delaware last year, up from 56% in 2020.
“On the Richter scale, it’s not that high,” said UNLV law professor Benjamin Edwards, “but it’s still shaking the ground.”
As shareholder litigation becomes a key concern for founder-led and high-growth companies, Delaware’s hold as America’s corporate capital is facing its stiffest challenge in decades.