Texas, Oklahoma and Nevada make changes to lure business amid Delaware’s
‘Dexit’ concern
[June 24, 2025] By
MINGSON LAU
CLAYMONT, Del. (AP) — Lawmakers in Texas, Oklahoma and Nevada have
recently approved changes aimed at helping their states dip into the
lucrative side of corporate litigation that Delaware, with a specialized
court and business-friendly laws, has dominated as the world's
incorporation capital.
Concerned that these changes may lure corporations away from Delaware,
thereby causing the small state to lose millions in corporate franchise
taxes, Delaware officials have responded with their own changes to
solidify their status in the business world.
In Texas, which opened a business court last year, there was bipartisan
support for legislation diminishing shareholder powers and giving
businesses more legal protections against shareholder lawsuits. Nevada
lawmakers approved a corporation-friendly update to its business laws,
also with bipartisan support, and separately moved toward asking voters
to consider changing the state constitution to create a dedicated
business court with appointed judges.
Billionaire Elon Musk had advocated both states as better options for
incorporation after a Delaware judge struck down his
shareholder-approved $56 billion compensation package from Tesla. Musk's
businesses have also changed where they're incorporated: Tesla and
SpaceX relocated to Texas, while Neuralink moved to Nevada.
Oklahoma also took action to get in the mix, as the Republican-led
Legislature sanctioned the creation of business courts in its two most
populous counties, a move the governor said would help Oklahoma become
the most business-friendly state.
“This is an area in which states, in many ways, are behaving like
businesses,” said Robert Ahdieh, dean of the Texas A&M University School
of Law. “Delaware is selling something. Texas is selling something that
they hold out to be better. So it is very much a comparative exercise.”
Concerns about a 'Dexit'
Since 2024, several billion-dollar companies including TripAdvisor and
DropBox have relocated to Nevada. More than a dozen others, including
the AMC theater chain and video game developer Roblox Corporation, have
announced plans to incorporate there this year. Latin American
e-commerce giant MercadoLibre filed a request for shareholders to
approve a Texas relocation in April, citing Delaware’s “less
predictable” decision-making process — a common thought among exiting
companies.
Amid concerns about more companies reincorporating elsewhere in a
so-called “Dexit,” Delaware passed its own legislation to help protect
its status as the corporate capital, limiting shareholders’ access to
records and increasing protections for leadership. Opposition dubbed it
“the Billionaire’s Bill.”
“Ultimately, I think the damage is done because businesses successfully
undermined shareholder rights in Delaware,” said Corey Frayer, director
of investor protection at Consumer Federation of America, who argues
that the Delaware bill was a rash acquiescence to “Dexit” concerns.
However, some business law experts, like Ahdieh, say the average
shareholder is focused on increasing their returns and does not care
about shareholder power or where the company is incorporated.
Delaware Gov. Matt Meyer has vowed to win back companies that leave,
arguing his state’s experience “beats going to Vegas and rolling the
dice.”
Less predictability
Companies flock to Delaware for its well-respected Court of Chancery, a
sophisticated and separate forum focusing on equity, corporate and
business law. This incorporation machine generates $2.2 billion
annually, about one-third of the state’s operating budget.
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Shown is the Leonard L. Williams Justice Center housing the Court of
Chancery in Wilmington, Del., Oct. 4, 2022. (AP Photo/Matt Rourke,
File)
 There is comfort in working in the
familiarity of Delaware law, said Ahdieh, but that predictability
has come into question in the last decade as corporate leaders grew
unhappy over losing precedent-setting court decisions governing
corporate conflicts of interest.
Widener University Commonwealth law school professor Christian
Johnson acknowledged a shift in Delaware but said reincorporating
elsewhere might be “a bit of an overreaction.” Although a few
big-name companies have moved, there are still more than 2 million
legal entities incorporated in Delaware, including two-thirds of the
Fortune 500.
Statutes in Texas and Nevada may appear more flexible, but they have
not been extensively tested, and their courts are not as experienced
working with the larger entities that favor Delaware, Johnson said.
Protections in Texas
In May, Texas Gov. Greg Abbott signed legislation providing greater
securities for corporate officers and adding restrictions to
shareholder records requests. The bill also allows corporations to
require an ownership threshold, no more than 3% in outstanding
shares, before a shareholder can initiate a derivative lawsuit,
typically on behalf of the company and against its own board or
directors.
Restrictions on who can initiate such lawsuits are not uncommon, but
Texas’ implementation imposes a “far higher barrier than the norm,”
Ahdieh said.
Consumer advocates worry the changes endanger shareholder and
investor protections by giving owners and directors more protection
against lawsuits that could hold them accountable if they violate
their fiduciary duty.
For businesses, the changes mean potentially saving millions of
dollars in shareholder lawsuit settlements and legal fees by
mitigating the likelihood of those costly cases reaching court. For
the states, attracting the companies means millions in business
activity and revenue from regulatory filing and court case fees and
taxes.
New courts
Eyeing a piece of that, Oklahoma is on pace to establish its
recently approved business courts in 2026.
“I’m trying to take down Delaware," said Oklahoma Gov. Kevin Stitt,
a Republican. "We want to be the most business-friendly state.”
Nevada wants to compete, too. It has run business dockets in Washoe
and Clark counties since 2001, and it's in the state’s interest to
expand operations considering its fast-growing economy and
population, said Benjamin Edwards, a University of Nevada, Las Vegas
law professor who studies business and securities law.
But he said it could take decades to build up a court comparable to
Delaware, which has a valuable reputation for handling cases
relatively quickly.
Nevada's proposed business court wouldn't take effect until 2028 at
the earliest and would require amending the state constitution,
which would need approval by the 2027 legislature and voter approval
in 2028 to allow for the appointment of judges.
___
Associated Press reporter Marc Levy in Harrisburg, Pennsylvania,
contributed to this report.
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