DEXIT to Texas: Companies continue to leave Delaware for Texas

By Bethany Blankley
The Center Square

Companies are continuing to leave Delaware, redomiciling in other states, referred to as DEXIT.

More recently, Fortune 500 companies have been making high profile announcements to redomicile in Texas, leading a DEXIT to Texas movement.

Companies are also redomiciling in Nevada and other business friendly states – a trend that began in earnest after the Delaware Court of Chancery invalidated Elon Musk’s $56 billion Tesla compensation package in January 2024. Since then, business proxy statements requesting that shareholders support reincorporating in other states have generally cited five key reasons, according to an analysis published by Harvard Law School Forum on Corporate Governance.

They include reduced legal exposure, a state’s rule-based system creating government certainty and limiting judicial activism, cost savings, closer proximity to business operations and attracting and retaining a talented workforce.

The analysis found that DEXIT businesses said other state statutes minimize director liability whereas Delaware’s legal environment encourages “unmeritorious and costly” litigation against controlled companies. Rule-based systems in Nevada and Texas, for example, also create governance certainty and limit judicial interpretation contrasted with challenges they’ve faced in Delaware, companies argue. They also cite “substantial cost savings,” including one company comparing a $250,000+ franchise tax in Delaware to an annual $500 business license fee in Nevada.

Dallas, Texas-based Jackson Walker LLP Partner Byron Egan explains, “Texas is a frequently considered a DEXIT destination because it is considered to be a business-friendly state with a newly formed Business Court, amended Texas Business Organizations Code and favorable state taxes.”

Gov. Greg Abbott and the Texas legislature have also “capitalized on executives’ frustrations with the Delaware Chancery Court,” he argues, by establishing Texas’ new business court. The court, which began hearing cases in 2024, is often cited by companies as a top reason for redomiciling, including by Exxon Mobil, Tesla, Dell Technologies, Coinbase, among others, The Center Square reported.

Another reason businesses cite is the Delaware Court of Chancery’s support of so-called Environmental Social Governance policies, which are banned in Texas.

In 2021, Abbott signed SB 13 into law after state lawmakers expressed concerns that prominent financial institutions and investment funds were targeting the Texas oil and gas industry to financially penalize them in favor of alternative energy. The law prohibits certain state agencies from investing funds in financial companies taking “any action that is, solely or primarily, intended to penalize, inflict economic harm on or limit commercial relations with [an energy company that] does not commit or pledge to meet environmental standards beyond applicable federal and state law.”

The Texas Comptroller’s Office has a divestment list and over the years, companies altered their policies to comply with state law, The Center Square reported. Under the Trump administration, multiple large banks also withdrew from a United Nations-led Net Zero Alliance in January 2025. They’d held firm on their ESG policies even after 19 state attorneys general, including Texas, launched investigations into them for alleged deceptive trade practices connected to ESG. They began dropping them after the Trump administration banned ESG policies, The Center Square reported.

Two years earlier, former Attorney General Bill Barr argued Delaware was “trying hard to drive aways corporations” through ESG and other policies embraced by the Delaware Court of Chancery. He also pointed to other blue states “using ESG to inject the progressive political agenda on climate, race, and other issues into corporate governance” causing negative economic outcomes.

Delaware Court of Chancery Judge J. Travis Laster responded in a public rebuke, criticizing Barr and arguing some stockholder-director duty “versions justify ESG as a means of promoting stockholder value.”

ESG and other policies like so-called Diversity, Equity and Inclusion (DEI) were also cited by companies as reasons to look for an alternative to the New York Stock Exchange. They have since found it in the Texas Stock Exchange, the only national securities exchange built and headquartered in Texas.

Texas now has more financial services employees than New York City, the Partnership for New York City notes, citing Texas’ “combined tax advantages, legal modernization, workforce growth, and aggressive economic development tools to attract headquarters, talent, and capital” as advantages.

The Texas Stock Exchange has attracted businesses nationwide while also supporting economic growth in 11 southern states in the Boom Belt, The Center Square reported. Texas this year also surpassed California with having the most Fortune 500 headquarters.

As “Delaware has squandered its inheritance,” Texas’ “Y’all Street will reduce barriers for businesses and refocus on core investment principles instead of ESG and DEI mandates,” Abbott said.

“Businesses domiciled in Delaware have a choice to make,” he argues. “They can stay and be subjected to increasingly unpredictable theories of liability. Or, like Americans before them, they can come to Texas. Unlike Delaware, the Lone Star State is open for business.”