Several publicly listed companies with market values exceeding $1 billion are considering voting in the coming weeks on whether to abandon Delaware as their registered jurisdiction, potentially shaking up Delaware’s status as a corporate registration center in the United States. This decision comes as a response to the high-profile moves of companies like Tesla.
Over the past year, five companies with market values exceeding $1 billion have moved out of Delaware, a phenomenon dubbed as “Dexit.” Tesla moved to Texas in 2023, followed by Trump Media and Technology Group (operating Truth Social) relocating to Florida in April 2024. The Delaware courts have intensified scrutiny on majority shareholder cases in recent years, increasing litigation risks. In 2023, the court voided Tesla CEO Elon Musk’s $56 billion compensation plan, which became a pivotal event. Musk then posted on X platform, advising against registering companies in Delaware. Tesla and SpaceX swiftly reregistered in Texas.
Trump Media stated that Delaware’s judicial environment is unfavorable for majority shareholder companies, with unpredictable decision-making, prompting their move to Florida. Other companies, such as Dropbox, The Trade Desk, and Cannae Holdings, shifted to Nevada. Simon Property Group (planning to move to Indiana) and Roblox (proposing a move to Nevada) are set to vote, with Roblox citing Nevada’s more predictable legal environment.
Delaware is home to 2.2 million registered entities, more than twice its population. Last year, 81% of U.S. Initial Public Offerings (IPOs) chose Delaware as their registration location. The state’s lack of sales tax and reliance on corporate registration fees and taxes, generating around $2.2 billion in revenues, is crucial for funding public services like education, affordable housing, and infrastructure improvement. To combat business outflow, in March 2025, Delaware passed legislation restricting judges’ authority to review commercial transactions and tightened shareholder “books and records” request tools. However, Delaware still rigorously examines internal transactions, like executive compensation, while Nevada follows a “business judgment rule” – lawsuits are avoided as long as there is no fraud. Texas’ new company law allows for setting shareholder lawsuit ownership thresholds, reducing litigation risks for minority shareholders, such as in Musk’s compensation case where the plaintiff held only nine shares.
Though many companies register in their operational locations, Delaware has long been the preferred jurisdiction due to its tax advantages, easy registration process, and centuries-old corporate legal system. According to data from former U.S. Secretary of State Jeffrey Bullock, approximately 68% of Fortune 500 companies and 79% of U.S. IPOs were registered in Delaware in 2022. The state had over 1.9 million business entities in 2022, including corporations, Limited Liability Companies (LLCs), Limited Partnerships (LPs), and statutory trusts. Despite being the second smallest state by area with a population of around one million, Delaware’s Court of Chancery, established in 1792, specializes in corporate law. Delaware’s unique incorporation of the English common law system sets it apart from the other 49 states.
According to Delaware’s 2022 annual report, 58,662 new companies were established, a decrease from the previous year’s 62,510 establishments, marking the first downturn in new company formations in over a decade.
Despite this, according to ISS-Corporate data, the percentage of companies registered in Delaware within the Russell 3000 Index (which nearly covers all listed companies) continues to rise, from 56% in 2020 to 62% last year. However, 2024 marked the first year where more companies left Delaware rather than relocated there within the Russell Index.
Texas and Florida have attracted companies due to their low taxes and relaxed regulations. Texas has no state income tax, business-friendly policies with relaxed litigation restrictions, and cities like Austin offer advanced infrastructure with tax incentives supporting electric vehicles and aerospace industries.
Florida lacks personal income tax, boasts low corporate taxes, shareholder-friendly laws, while Miami serves as a hub for the global market, and its warm climate attracts top-tier talents.
Companies leaving Delaware may reshape the landscape of corporate registration in the U.S. While Delaware has long attracted over half of publicly listed companies with its mature corporate laws and professional courts, legal changes are prompting companies to reconsider their registration jurisdiction. Nevada, Texas, and Florida are gaining market share with their low taxes and relaxed regulations. Delaware’s revenues may decline due to business departures, necessitating policy adjustments to retain companies. The economies of Texas and Florida could experience accelerated growth, fostering business clusters.
However, there are risks associated with leaving Delaware. While Delaware offers stable and predictable laws, legal frameworks in other states may not have undergone sufficient testing. Nevada’s “business judgment rule” may lack in protecting shareholder rights, and Texas and Florida may face increased labor costs and infrastructure strains as businesses flock in.