More Companies Move Away from Delaware in Search of Friendlier Corporate Environments

For decades, Delaware reigned supreme as America’s corporate capital, with its business-friendly laws and specialized Chancery Court system making it the go-to choice for company incorporation. However, this long-held status quo is being challenged by recent high-profile corporate departures to states like Nevada, Texas and Wyoming. Delaware is scrambling to maintain its edge with new legislation, but businesses are discovering compelling alternatives that may better suit their needs in today’s evolving corporate landscape.

Major Corporations Vote with Their Feet

The corporate world took notice when industry giants like Tesla, SpaceX, TripAdvisor, and Dropbox chose to relocate their incorporations to other states. Tesla and SpaceX moved their incorporations to Texas in 2021, citing the state’s lower costs, lighter regulatory burden, and more favorable tax environment. TripAdvisor left Delaware for Nevada in 2023, as did Dropbox in 2025, reportedly drawn by Nevada’s stronger liability protections and more management-friendly corporate laws. With Meta (formerly Facebook) also considering a move away from Delaware, it’s clear that the state’s traditional advantages may no longer be enough to maintain its corporate dominance.

Delaware Court Rulings Spark Corporate Concerns

These departures have been fueled in part by recent rulings from Delaware’s Chancery Court that have unsettled some companies’ belief in the business-friendly environment. In the 2022 case of In re MultiPlan Corp. Stockholders Litigation, the court allowed a shareholder lawsuit to proceed against a special purpose acquisition company’s (SPAC) sponsor, going against the prevailing view that SPACs provided substantial protections against such litigation. And in the 2020 case of Salzberg v. Sciabacucchi, the court invalidated a company’s federal forum provision (later overturned by the Delaware Supreme Court), leading to worries about companies’ ability to manage securities litigation through charter and bylaw provisions.

These rulings, combined with the high-profile departures, represent a broader shift in how companies evaluate their incorporation options, with factors like operating costs, regulatory landscapes, liability exposure, and governance flexibility coming into play alongside Delaware’s historical strengths. The state’s response, in the form of new proposed legislation aimed at better protecting founder-controlled companies from shareholder litigation, highlights both its determination to retain pole position and its recognition that times are changing.

Other State Options and What They Offer

Several states have emerged as particularly attractive alternatives to Delaware. Nevada offers enhanced privacy protections for corporate ownership information, reduced litigation risk thanks to corporate laws that provide stronger protection against shareholder lawsuits, lower filing fees and maintenance costs compared to Delaware, and simplified compliance requirements that reduce administrative burden. Wyoming boasts the advantages of no state corporate income tax, franchise tax, or personal income tax, robust asset protection laws that can shield personal assets from business liabilities, and minimal annual reporting requirements.

Even our home state of Virginia remains a business friendly alternative to Delaware. Virginia allows a wide range of corporate structures, including benefit corporations, series LLC’s and blockchain-based LLCs, providing options for businesses with varying needs and goals. It also has lower fees than Delaware. To the extent a more balanced approach to shareholder protection is attractive, Virginia has a number of minority shareholder protections built into its corporate code, including granting appraisal rights to shareholders in a broader range of circumstances than Delaware.

Delaware’s recent legislative proposals reveal its strategy to maintain a competitive edge by shielding founder-controlled companies from certain types of litigation, restricting shareholder access to corporate records to reduce successful litigation, and enhancing provisions to protect board decisions. However, these changes raise important questions about the balance between corporate protection and shareholder rights.

Key Considerations for Corporate Incorporation Decisions

For businesses, this evolving landscape presents important customization options to align with specific priorities. These include cost implications beyond initial filing fees, governance flexibility to match management philosophy and operational needs, and achieving the desired balance between various stakeholder interests. When evaluating incorporation or new domicile options, companies should carefully consider how different states’ requirements align with their operational structure and future plans, which jurisdiction best supports their anticipated growth trajectory, how liability protection and litigation risk approaches match their risk tolerance, and the total cost implications, including filing fees, ongoing compliance, and tax obligations.

Looking ahead, the corporate incorporation landscape is likely to see continued evolution as states compete for business and adapt to changing corporate needs. While Delaware’s new legislation may help it retain some companies, the trend toward greater competition among states appears likely to persist. Expect further legal innovations as states develop novel corporate law approaches, enhanced infrastructure and support services to better serve incorporated entities, and specialized niches as different jurisdictions focus on serving specific business types or industries more effectively. 

For businesses considering incorporation or changing their domicile, this shifting landscape presents both opportunities and challenges. As competition continues to intensify, companies stand to benefit from an increasingly robust menu of incorporation options, each with its own unique advantages and considerations. Ultimately, this transformation marks an important inflection point in American business law and practice – one where more innovative and flexible corporate law frameworks across the country may emerge, to the benefit of businesses of all sizes and types.

Please reach out to us to discuss the best incorporation or domicile options for your new or existing business.