DExit: Why Some Companies Are Leaving Delaware

Key Takeaways

“DExit” Movement: There is a widely-reported trend of companies reincorporating out of Delaware into states like Texas, Nevada, and Florida due to recent Delaware court decisions affecting director protections and compensation packages.
Legislative Responses: Delaware has responded with new statutes to clarify and codify rules around controlling shareholders and board decision-making, but the long-term impact depends on judicial interpretation.
Texas Business Innovations: Texas has introduced business courts, codified the business judgment rule, and allows companies to set ownership thresholds for shareholder litigation, aiming to provide more certainty and innovation for corporations.
Review Incorporation Strategy: Board and legal teams should assess current state of incorporation and evaluate potential benefits and risks of moving to Texas, Nevada, or Florida, considering recent legislative and judicial changes.