DEXIT: Corporate Movement or Buzzword?
For over a century, Delaware has led the nation in corporate law. For every Delaware resident, there are two companies incorporated in the state. Delaware is home to two-thirds of Fortune 500 companies and 70% of IPOs.[1] Despite Delaware’s long-standing dominance, some legal commentators warn of a new corporate movement known as “DEXIT” – the idea that corporations will leave Delaware en masse and reincorporate in other states, such as Nevada or Texas. DEXIT gained attention in 2024, when Elon Musk decided to reincorporate Tesla and SpaceX from Delaware to Texas. The announcement followed an unfavorable ruling by the Delaware Court of Chancery on Musk’s compensation package. Since then, several other high-profile companies, including TripAdvisor and Dropbox, have relocated from Delaware to Texas.
State legislatures in Texas and Nevada are seeking to attract companies through favorable legislation and regulation. In 2024, Texas established a Business Court to specialize in corporate matters, and Nevada has pending legislation to do the same. Both states set a higher bar for plaintiffs seeking to prove that corporate directors acted in bad faith or against the corporation’s best interests. Other commonly cited reasons for reincorporating in to Texas or Nevada include franchise tax savings, a statute-focused approach, stronger litigation protections for fiduciaries, and more permissive treatment of conflicts of interest.
Despite the efforts of Texas and Nevada, there remain many reasons for companies to stay in Delaware. One of the state’s biggest draws is its established court, the Delaware Court of Chancery, founded in 1792. With more than two hundred years of case law to rely on, Delaware offers a more consistent, predictable, and stable litigation environment.[2] Studies show that shareholders generally prefer remaining in Delaware over reincorporating; venture capitalists, activist investors, and institutional investors have all demonstrated a general preference for Delaware.[3] The cost and burden of reincorporation may also dissuade companies from making the change. Finally, Delaware is not yielding to the pressure from by Texas and Nevada. A recently passed Senate Bill seeks to provide additional protections for certain directors, officers, and stakeholders (to learn more about this bill and its impacts, see our article).
With headlines declaring the threat of DEXIT, it is easy to assume that a mass exodus is imminent. A closer look at the numbers, however, reduces the purported flood of companies leaving Delaware to a mere trick. In 2025, an estimated 21 Delaware companies reincorporated in Nevada and 6 reincorporated in Texas.[4] These companies represent a tiny fraction of the 2.28 million entities incorporated in Delaware. Moreover, Delaware’s numbers are growing, not shrinking. In 2025, 74,716 new corporations formed in Delaware, a 15% increase from 2024.[5] The data, therefore, does not support a widespread corporate movement. As a UCLA research study concluded, “DEXIT is not a thing and is unlikely to become a thing.”[6]
Although claims of a seismic shift in corporate law may be overstated, the DEXIT conversation offers companies a timely opportunity to reassess where they are incorporated ,and why. As Texas, Nevada, and Delaware compete to offer more favorable environments, corporations have a valuable occasion to evaluate which jurisdiction best supports their goals. Dvorak Law Group can help you navigate these considerations and determine the jurisdiction best suited to your companies’ objectives. Please contact us to discuss how we can assist.
[1] https://corp.delaware.gov/stats/
[2] https://courts.delaware.gov/chancery/history.aspx
[3] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4909689
[4] https://www.businesslawprofessors.com/2026/02/final-2025-nevada-and-texas-reincorporation-lists/
[5] https://corp.delaware.gov/stats/
[6] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4909689
About Dvorak Law Group, LLC
Dvorak Law Group, LLC is a full-service business, estate and wealth transfer planning, and litigation law firm with offices in Omaha, Hastings, Sutton, and Columbus, Nebraska, and Sioux Falls, South Dakota. It serves individuals, businesses, non-profit organizations, and government entities in Nebraska, South Dakota, and throughout the country. To learn more about Dvorak Law Group, please visit www.dvoraklawgroup.com.
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