Texas, Oklahoma, and Nevada Revamp Strategies to Attract Business Amid Growing ‘Dexit’ Concerns in Delaware

Lawmakers in Texas, Oklahoma, and Nevada are making moves to attract businesses that traditionally flock to Delaware for incorporation. Delaware has long been known for its corporate-friendly laws and a specialized court system that has made it a top choice for companies. However, the tide is shifting as other states seek a piece of the corporate pie.

In Texas, a new business court is already in place, and recent legislation is increasing protections for businesses while limiting shareholder powers. This shift received support from both parties. Similarly, Nevada is updating its business laws and considering a dedicated business court that would have appointed judges, further highlighting its willingness to create a favorable environment for companies.

Notably, billionaire Elon Musk has promoted these states for business incorporation. After a Delaware judge ruled against his hefty compensation package, Musk relocated companies like Tesla and SpaceX to Texas, while Neuralink found its new home in Nevada.

Oklahoma is also looking to capitalize on this trend. The state plans to create business courts in its two largest counties, aiming to become a beacon for business-friendly legislation. “States are behaving like businesses,” noted Robert Ahdieh, dean of the Texas A&M University School of Law. “Delaware is selling something, and now Texas is, too.”

As companies consider relocating, Delaware faces what some are calling “Dexit”—a wave of departures. Since 2024, major firms like TripAdvisor and Dropbox have chosen to incorporate in Nevada, attracted by its less predictable decision-making in Delaware. In response, Delaware passed its own legislation to maintain its corporate stronghold, provoking concerns about shareholder rights. Critics label this measure the “Billionaire’s Bill,” suggesting it favors business leaders over average investors. Corey Frayer from the Consumer Federation of America states that this might undermine shareholder protections, indicating a larger trend where businesses prioritize their interests over those of shareholders.

While some experts argue that shareholders primarily focus on returns rather than governance structures or state differences, Delaware’s reputation is at stake. The state houses over two million legal entities, including two-thirds of Fortune 500 companies. However, recent trends suggest that its monopoly might be weakening.

The predictability of Delaware law has faltered, particularly as corporate leaders grow dissatisfied with court decisions on conflicts of interest. Christian Johnson, a professor at Widener University, believes that while some companies are moving, it’s an overreaction. Delaware still maintains a robust system that is hard for newer entities to replicate. Texas and Nevada’s proposed legislation might seem appealing, but they lack the extensive testing and historical precedence found in Delaware.

In Texas, recent laws not only bolster corporate officers’ protections but also impose strict requirements for initiating shareholder lawsuits, making it tougher for shareholders to hold directors accountable. Critics warn this could jeopardize accountability, while businesses could save substantial costs by avoiding litigation.

Oklahoma expects to roll out its business courts by 2026, with Governor Kevin Stitt declaring a desire to outpace Delaware. Nevada has already operated business dockets for years and aims to enhance those services further. However, experts like Benjamin Edwards from the University of Nevada express caution; establishing a court with the same reputation and efficiency as Delaware’s could take decades.

The competition among states to attract businesses is intensifying. As Delaware faces challenges, it must adapt to retain its long-standing dominance. While businesses seek favorable ground, states are responding as if in a corporate rivalry, demonstrating how vital these decisions are for their economies.

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