A high-profile discussion has continued among many in the market over the status of Delaware as the favored state of incorporation compared to other states. Nevada and Texas have continued to engage in competitive efforts and have gained some ground, with several notable reincorporations occurring in those states, alongside of companies already incorporated in those states. Delaware, meanwhile, has taken significant steps over the last two years to remain competitive and preserve its status as the favored domicile. In this discussion, we provide an overview of pertinent developments and current differences in the legal approaches among the states to help companies—and their founders, boards, members of management, and investors—understand the ongoing debate and landscape.

The Emergence of the Conversation

In order to contextualize the ongoing debate and some of the ensuing corporate law amendments, it is important to understand the concerns that were raised about Delaware in the first place. In our experience, these included: the expansion of challenging fiduciary duty case law and related procedures for companies with controlling stockholders; the perception of a more litigious environment in Delaware, with a more successful and vocal plaintiffs’ bar; and cases that reached surprising conclusions on significant issues, including in the M&A and stockholder agreement context.

Several prominent voices have raised concerns in a manner that caught attention. This included Elon Musk’s much-publicized X post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[1] In May 2025, well-known Stanford law professor Joseph Grundfest published a working paper comparing the size of plaintiffs’ attorneys’ fee awards in Delaware and the federal courts, which became the subject of later high-profile commentary from a prominent venture capital investor and coverage from the New York Times.[2] In July 2025, Andreessen Horowitz  announced its intention to reincorporate its operating company from Delaware to Nevada and encouraged others to consider leaving Delaware.[3] In our experience, recent Delaware corporate law amendments, described further below, have caused many actors in the market to take a “wait-and-see” approach on the reincorporation debate, albeit while monitoring the situation. But these developments also, in our experience, have periodically renewed interest in the ongoing conversation and some companies are still choosing to leave Delaware.

Recent Trends in Reincorporation

TripAdvisor was one of the most significant early movers in the reincorporation discussion, announcing on April 10, 2023, that it intended to seek a stockholder vote on a reincorporation from Delaware to Nevada at its annual meeting.[4] Since then, there have been over 40 proposals by public companies to reincorporate out of Delaware. While there has always been movement in and out of Delaware, what is different of late is that the departing companies are often large and cite anti-Delaware reasons for leaving the state (as compared to, for example, simply moving back to a home state).

Of course, the subset of companies that have announced or completed a reincorporation out of Delaware is still relatively small, and Delaware remains the favored home for nearly 66.7 percent of the Fortune 500, 63.8 percent of the S&P 500,[5] and approximately 81.4 percent of all U.S. initial public offerings in calendar year 2024.[6] But the subset of reincorporating companies since April 2023 includes many significant public companies with sizeable market capitalizations, including Tesla, Roblox, Simon Property Group, Dillard’s, Fidelity National Financial, Tempus AI, and TripAdvisor.

As for initial public offerings, companies newly going public have largely chosen to remain incorporated in Delaware,[7] although we are aware of several IPOs close to the time of this publication that have chosen Nevada or Texas.[8] As for private company practice more generally, publicly available statistics are scant, but in our experience, although the conversation began more among public companies, private companies are continually monitoring the debate and at times reincorporating.  

Current Nevada and Texas Corporate Law Landscape

In the course of these reincorporation discussions, Nevada and Texas have emerged as the leading choices for reincorporation. Most public companies have chosen Nevada when reincorporating, although some have chosen Texas (e.g., Tesla, Dillard’s, and Zion Oil & Gas) and some have chosen their state of headquarters (e.g., Simon Property Group (Indiana) and Trump Media & Technology Group (Florida)).

As for what has attracted some reincorporating companies to Nevada and Texas, there are several factors. In our experience, the below factors figure most prominently in the ongoing conversation.  

Reliance on statutory law versus case law. Both Texas and Nevada have projected greater reliance on statutory law rather than case law. In recent decades, Delaware law has relied on well-developed case law precedent alongside its carefully maintained enabling statute. Reincorporating companies have cited the unpredictability and uncertainty associated with a case law-based approach to corporate law as a reason for leaving Delaware. At the same time, the ability of expert judges in Delaware to render case-specific, tailored, sound results has historically been viewed as a benefit of Delaware incorporation.  

Protections for directors and officers. Additionally, Nevada and Texas have adopted statutory protections for directors and officers in the fiduciary duty context, with both states requiring a showing that an alleged breach involved intentional misconduct, fraud, or a knowing violation of law in order for directors or officers to face liability.[9] In Nevada, these limitations on liability for directors and officers apply automatically to every Nevada corporation, except as otherwise provided by law or unless the articles of incorporation provide for greater individual liability. In Texas, these limitations only apply to a corporation that has 1) a class or series of voting shares listed on a national securities exchange or 2) amended its governing documents to affirmatively elect to be governed by the relevant section of the Texas statute. Delaware law, by contrast, provides more limited protections for officers because officers can only be exculpated for breaches of the duty of care where the claim is direct rather than derivative and the company has amended its charter to provide for such exculpation. The charter of a Delaware corporation may limit personal liability for directors for breach of the duty of care, but not for loyalty or bad faith breaches, certain unlawful dividends or stock repurchases, or the receipt of improper personal benefits. 

Stockholder inspection rights. Nevada and Texas also have more limited statutory “books and records” rights that allow stockholders to inspect corporate records—such as board minutes and communications—outside of the formal litigation context. In Nevada, only stockholders who have held shares for at least six months or who hold at least five percent of all outstanding shares may inspect certain basic documents:  the charter, bylaws, and stock ledger of the corporation. For most public companies, however, stockholders of Nevada corporations have no statutory inspection rights beyond those categories. For private companies, Nevada stockholders who own at least 15 percent of all outstanding shares may inspect the books of account and financial statements of a corporation.[10] By comparison, Texas has similar holding requirements to Nevada (six months of stock ownership or five percent stock ownership) to exercise inspection rights, although Texas does not eliminate inspection rights for public stockholders. In addition, the Texas statute was recently amended to provide that electronic communications such as emails and text communications generally cannot be obtained in connection with inspection rights. The recent amendments further provide that public Texas corporations and private companies that make a proper opt-in may deny inspection demands by a requesting stockholder with ongoing or expected litigation involving the company or a derivative proceeding.

Delaware does not have similar holding requirements to Nevada and Texas, although, as discussed further below, the Delaware General Corporation Law (DGCL) was recently amended to limit the scope of inspection rights to core books and records of a corporation (for example, to avoid the production of emails and texts), subject to certain limited exceptions.

Treatment of controlling stockholders. As a baseline, Delaware law provides that conflicts of interest involving a controlling stockholder automatically result in a heightened standard of judicial review, absent the use of procedural protections. Delaware law had also increasingly concluded that fairly low levels of stock ownership could result in controlling stockholder status. These rules were the backdrop of the Elon Musk compensation case and dozens of other recent stockholder litigations in Delaware. As discussed in greater detail below, Delaware has since adopted significant statutory amendments to bring greater clarity to its rules around controlling stockholder conflicts and to enable clearer transactional planning.

Nevada case law, by contrast, has held that controlling stockholder conflicts of interest do not result in a heightened standard of review in litigation. Nevada also recently adopted amendments to its corporate statute providing that a controlling stockholder exists when a stockholder has the voting power, by virtue of such stockholder’s relative beneficial ownership or otherwise pursuant to the charter, to elect at least a majority of the corporation’s directors, and that approval by a disinterested board committee or by the board in reliance on the recommendation of a disinterested board committee will provide a presumption that no breach of fiduciary duty by a controlling stockholder has occurred.

Recent Texas amendments, for their part, provide an ability to form committees of independent and disinterested directors to review and approve transactions involving the corporation or any of its subsidiaries and a controlling shareholder, director, or officer and seek an upfront judicial determination about director independence and disinterest with respect to such transactions. Under this provision, a court’s determination that the directors are independent and disinterested is dispositive in the absence of facts not presented to the court. 

Regulation of the litigation environment and costs. Texas statutory law caps fee awards in class actions at 4x the hourly rate of plaintiffs’ counsel, and Texas also recently amended the Texas statute to permit public companies and private companies with 500 or more stockholders to adopt ownership thresholds, of up to three percent of the company’s shares, for shareholders to bring a derivative lawsuit. We are not aware of any such legislation in Nevada, and Delaware law has no such provisions. 

The court systems. The Delaware Court of Chancery has served as an established and expert business court—and one that acts without juries and with great speed—for over a century. The court handles thousands of disputes each year, and its members are appointed by the Delaware governor and serve 12-year terms. Texas business courts were established in the fall of 2024, and those judges are appointed by the Texas governor for two-year terms. Nevada does not currently have dedicated appointed business courts, but rather has “business court judges” in the Second and Eighth judicial districts that are elected and more commonly hear business disputes as they arise, among other matters. The Nevada legislature is pursuing constitutional amendments to create and fund a dedicated business court with appointed judges—which will take several years before it could become operational—and the Nevada Supreme Court has proposed the creation of a commission to enhance the existing business court dockets.[11] Both Texas and Nevada have also recently adopted amendments to their statutes to permit corporations to waive in their governing documents the right to jury trials with respect to certain types of internal corporate actions.

The systemic benefits of Delaware. Companies—and founders, board members, members of management, and investors—should also take into account the longstanding benefits Delaware has offered, including a court system that can deliver fast and knowledgeable outcomes in bona fide business disputes; a responsive Secretary of State’s office that can quickly process important filings (such as charter amendments, IPO charters, and certificates of merger); and the familiarity of Delaware law in planning transactions, structuring entities and their arrangements, and in predicting disputes. 

The unknowns of other states. As a corollary to the benefits of Delaware, there are important unknowns to consider in other states. For example, there are thousands of Delaware cases that provide guidance on how to interpret important statutory issues for transaction planning and structuring. Other states, by contrast, do not have similar guidance. Although questions have arisen in the market about unmeritorious litigation in Delaware, Delaware’s court system delivers fast results when companies need them—for example, where a buyer walks away from an M&A deal, where a company needs a fast determination in a board or management dispute, or where a company believes that a stockholder has improperly nominated a board candidate in a proxy contest. Precisely how such litigation would unfold, and on what timetable, might be less known in other states. We have also observed that many companies—for example, in the artificial intelligence space—have made use of Delaware’s known set of technical rules in structuring their governance in bespoke ways. It is not to say that such approaches cannot be done in other states, but the rules may at times be less clear.      

Delaware Responds: Recent DGCL Amendments

Over the last two years, the Delaware legislature and governor have enacted significant sets of legislative amendments to Delaware’s corporate law to respond to recent developments and concerns raised in the market. 

On March 25, 2025, the latest set of amendments took effect and implemented several changes, including:

• providing a definition around what it means to be a controlling stockholder, under which, essentially, a controlling stockholder must either 1) possess a majority stake or elect a majority of the board of directors or 2) possess one-third of the stockholder voting power and the power to exercise managerial authority.
• providing clear mechanisms for cleansing conflicts of interest involving controlling stockholders, directors, and officers so that companies can plan transactions with predictability and avoid protracted litigation while still following governance safeguards.
• providing additional flexibility for cleansing controlling stockholder conflicts of interest by providing that a disinterested board committee or disinterested stockholder vote cleanses the transaction, unless it is a going-private transaction, in which case both protections are required to retain the protection of the deferential business judgment rule.
• providing a heightened presumption that public company directors deemed independent under stock exchange rules are also disinterested for Delaware law purposes, subject to limited exceptions.
• limiting inspection rights to core books and records of the corporation, such as the charter, bylaws, annual financial statements, and board minutes and accompanying board records, unless a stockholder shows a compelling need for other records, or a corporation fails to maintain certain categories of information and other records are necessary and essential to the stockholder’s purpose.[12]

Certain aspects of the March 2025 DGCL amendments have been challenged as unconstitutional, and the question of their constitutionality has been certified to the Delaware Supreme Court. Briefing on the issues remains ongoing, but we think that the merits of the lawsuit are weak.

An earlier set of amendments from 2024 reversed a few Court of Chancery decisions that were viewed as disruptive to market practice and expectations and implemented several changes, including: 

• providing that companies and stockholders can enter into stockholder agreements conferring, among other things, governance rights upon stockholders and obligations upon the corporation;
• permitting parties to a merger agreement to provide for penalties or consequences for a breach of the merger agreement and to allow the target corporation to obtain an award of damages based on the loss of premium payable to stockholders should the deal fall apart;
• providing that documents requiring board approval under the Delaware statute (such as merger agreements or charter amendments) may be approved by the board in “substantially” final form, subject to a new ratification process;
• confirming that disclosure schedules are not part of the merger agreement that the board and stockholders must approve; and
• broadly authorizing the use of stockholder representatives in merger agreements to act on behalf of other stockholders in connection with the merger (most commonly for private company deals).[13]

Another effort remains pending at the time of this publication: the Delaware legislature directed the Corporation Law Council of the Delaware State Bar Association—a Delaware body of expert practitioners that develops new legislation—to consider whether legislative reforms are needed to appropriately address the size and frequency of plaintiffs’ attorney fee awards for stockholder litigation.

Reincorporation Process Considerations

If a corporation chooses to explore reincorporation to another jurisdiction, the board and management will need to take into account several potential steps, including:

• the need for board and stockholder approval and which approvals will be needed under a company’s core governing documents;
• the appropriate level of board discussion and education;
• stockholder reactions and disclosures to stockholders;
• the need to prepare and approve new governing documents under the new state’s laws;
• any related impacts that must be considered, such as on commercial contracts, debt arrangements, employee equity plans, and the like; and
• the availability of appraisal rights when stockholders hold shares of a class that is not publicly traded.

Ultimately, the decision whether to reincorporate from Delaware to another state is for the directors to make based on what is in the best interest of the corporation and its stockholders, taking into account the totality of relevant factors, including the differences in the legal landscapes across states being considered for the new corporate domicile in a reincorporation and the knowns and unknowns. Stockholders will then need to approve a reincorporation. A company considering reincorporation should evaluate how a reincorporation would affect the corporation’s current and future business needs and how the differences in legal regimes may affect the corporation and its stockholders.

Concluding Thoughts

In our experience, although many companies and other market actors are in wait-and-see mode as corporate law developments further unfold, the conversation about the optimal state of incorporation has continued and some movement has occurred. The market will also undoubtedly be watching various developments that will occur in the next several months. These developments include the market’s absorption of the recent SEC Policy Statement on arbitration provisions,[14] the recent constitutional challenge to the DGCL amendments pending before the Delaware Supreme Court, the potential report from Delaware’s Corporation Law Council on plaintiffs’ fee awards, and the outcomes of high-profile appeals pending before the Delaware Supreme Court in the Tesla compensation case and in litigation over stockholder agreements.[15]

For more information on any of these matters, please contact any member of Wilson Sonsini’s Corporate Governance or Corporate Governance Litigation practices.

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[1] Tornetta v. Musk, 310 A.3d 430 (Del. Ch. 2024).

[2] Joseph Grundfest & Gal Dor, Lodestar Multipliers in Delaware and Federal Attorney Fee Awards (Stan. L. Sch. & Rock Ctr. For Corp. Gov., Working Paper No. 263, 2025), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5237545. Andrew Ross Sorkin et al., Companies Rely on Delaware Courts. Lawyers Reap Huge Fees There., NY Times: DealBook (June 2, 2025), https://www.nytimes.com/2025/06/02/business/dealbook/delaware-courts-legal-fees.html.

[3] Jai Ramaswamy, Andy Hill, & Kevin McKinley, We’re Leaving Delaware, And We Think You Should Consider Leaving Too, Andreessen Horowitz (July 9, 2025), https://a16z.com/were-leaving-delaware-and-we-think-you-should-consider-leaving-too/. 

[4] TripAdvisor, Inc., Preliminary Proxy Statement for the Annual Meeting of Stockholders (Schedule 14A) (April 10, 2023), https://www.sec.gov/ix?doc=/Archives/edgar/data/0001526520/000095017023012260/trip-20230410.htm.

[5] See Capital IQ Company Screening Report, S&P 500 (September 8, 2025). By way of comparison, while 319 S&P 500 companies are incorporated in Delaware, five are incorporated in Texas, and four are incorporated in Nevada. Id.

[6] Delaware Division of Corporations: 2024 Annual Report, Del. Div. of Corps. (2024), https://corpfiles.delaware.gov/Annual-Reports/Division-of-Corporations-2024-Annual-Report.pdf. 

[7] Id.

[8] See, e.g., Caris Life Sciences, Inc., Registration Statement Under the Securities Act of 1933 (Form S-1/A) (June 16, 2025), https://www.sec.gov/Archives/edgar/data/2019410/000110465925059635/tm2415719-23_s1a.htm; Black Rock Coffee Bar, Inc., Registration Statement Under the Securities Act of 1933 (Form S-1/A) (September 9, 2025), https://www.sec.gov/Archives/edgar/data/2068577/000206857725000013/blackrockcoffee-sx1a2.htm; Gemini Space Station, Inc., Registration Statement Under the Securities Act of 1933 (Form S-1/A) (September 10, 2025), https://www.sec.gov/Archives/edgar/data/2055592/000110465925088829/tm255912-31_s1a.htm.

[9] The Texas statute also contemplates a showing that an alleged breach involved an ultra vires act.

[10] In particular, Nevada inspection rights do not apply to any corporation that furnishes to its stockholders a detailed annual financial statement or any corporation that has filed during the preceding 12 months all reports required to be filed pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.

[11] A proposed Nevada Supreme Court Rule related to the commission is currently under review by the Nevada Supreme Court, and it contemplates, among other things, that business court judges would exclusively hear business matters and that business court judges would be screened by a nominating committee and selected by the Chief Justice of the Nevada Supreme Court. See Petition, In the Matter of the Adoption of the Creation of a Commission to Study the Adjudication of Business Law Cases, ADKT 0626 (filed July 31, 2025), https://aboutblaw.com/bjaL. 

[12] Additional information about the March 2025 DGCL amendments can be found in a client alert by our firm available at: https://www.wsgr.com/en/insights/delaware-enacts-landmark-corporate-law-amendments.html.

[13] Additional information about the 2024 DGCL amendments can be found in a client alert by our firm available at: https://www.wsgr.com/en/insights/significant-amendments-to-the-delaware-general-corporation-law-are-set-to-become-effective.html.

[14] Additional information about the recent SEC Policy Statement on arbitration provisions can be found in a client alert by our firm available at: https://www.wsgr.com/en/insights/sec-issues-policy-statement-clarifying-view-on-mandatory-arbitration-provisions.html.

[15] See, e.g., In re Tesla, Inc. Derivative Litig., Nos. 534, 2024; 10, 2025; 11, 2025; 12, 2025 (consolidated); Moelis & Company v. West Palm Beach Firefighters’ Pension Fund, No. 340, 2024.