Chancery Court

More companies are following the example of Tesla’s (TSLA) Elon Musk and signing off on an exit from Delaware.

But many are choosing Nevada — not Texas, as Musk did with Tesla in 2024 — as a new corporate home in 2025.

The latest example came Wednesday when a high-profile venture capital firm, Andreessen Horowitz, announced it would move the incorporation of its primary business, AH Capital Management, from Delaware to Nevada as it offered a critique of Delaware’s powerful business court.

The VC firm long associated with Marc Andreessen accused the state’s Chancery Court of injecting “legal uncertainty” into Delaware’s reputation as the gold standard for corporate law.

“In contrast, Nevada has taken significant steps in establishing a technical, non-ideological forum for resolving business disputes,” the company said.

Andreessen Horowitz is not the only one decamping for Nevada, which has been vying with Texas for the new attention of companies considering a so-called “Dexit” from Delaware — the dominant place for American companies to incorporate for roughly a century.

Seven publicly traded companies with market caps ranging from $1.5 billion to $71 billion have also asked their shareholders to vote in favor of leaving Delaware for Nevada during this year’s proxy season, and investors said yes to all of the departure proposals, according to a report from Freshfields.

Investor support for that move ranged from just over 50% to 85%.

“I think what boards are trying to do right now is figure out, what are the [state] differences, what are the differences that matter, and should we stay? Should we go?” said Benjamin EdwardsUniversity of Nevada Las Vegas associate dean and corporate governance law professor.

The votes in this year’s proxy season favored Nevada reincorporations for Fidelity National Financial (Fnf), Roblox (RBLX), Madison Square Garden Entertainment (Msge, Msgs), AMC Networks (AMCX), Sphere Entertainment (Sphr), and tempus ai (TEM).

Smaller firms with market caps under $1 billion, including XOMA Royalty (xomama), a biotech company; electronic gaming company Gaxos.ai (Gxai); Universal Logistics Holdings (Ulh); and Jade Biosciences (Jbio), also secured votes to move to the state.

Others that have already made the move over the past year include Dropbox (DBX), Trade Desk (TTD), and Sonoma Pharmaceuticals (SNO None).

And Bill Ackman, Pershing Square’s CEO, announced his own decision to reincorporate in Nevada in an X post earlier this year, saying that “top law firms are recommending Nevada and Texas over Delaware.”

Some Delaware-to-Nevada reincorporation bids have failed. Revelation Biosciences (REVB) lacked enough votes despite more than 89% of present stockholders voting in favor of the proposal. Eightco Holdings (OCTO) and Remark Holdings (MARK) similarly fell short of gaining requisite support.

Edwards said he doesn’t expect Delaware to lose its wide appeal to American businesses anytime soon but corporate leaders are evaluating which state’s laws are the best fit for their businesses.

“There’s a reality that where you’re incorporated affects how you’re going to make high level governance decisions, particularly when you’re a public company,” Edwards said. “You want to maximize flexibility. And Delaware may not be it.”

Some companies, for example, may choose Nevada over Delaware because Nevada law allows companies to insulate directors and officers from personal liability for breaches of their duty of loyalty, unless they intentionally acted in bad faith.

As for the duty of care to the corporation, both Delaware and Nevada allow corporations to insulate directors and officers from personal liability.

Critics argue that the difference gives shareholders of Nevada corporations less protection from unfair director and officer actions because Nevada’s law gives them leeway to violate their duty of loyalty.

But Edwards said that’s unlikely because, in practice, it would be difficult for a director or officer to unintentionally act disloyal toward a company they serve.

Companies may also choose Delaware or Nevada over Texas because intellectual property allegations carry more litigation risk in Texas. On the other hand, he said, a larger volume of lawsuits should be expected in Delaware.

“Now they’re thinking, ‘Okay, do we want to be in Delaware?'” Edwards said.

The trouble for Delaware started in January 2024 when its Chancery Court’s head judge, Chancellor Kathaleen McCormick, struck down a 2018 Tesla shareholder vote approving Musk’s $56 billion performance-based compensation deal.

Musk immediately warned other companies: “Never incorporate your company in the state of Delaware.” Musk-led companies Tesla and SpaceX (Spax.pvt) then left Delaware for Texas.

But he also chose Nevada for some of his other companies: The Boring Company, Neuralink, and X.

Nevada, Texas, and Delaware have all made major changes to their respective laws this year designed to increase their allure with companies.

Delaware cut back on director and officer liability by limiting fiduciary duties for controlling shareholders and reducing a company’s burden to respond to shareholder information demands known as 220 requests, which allow shareholders to inspect a company’s books and records.

Nevada, which offers no shareholder rights to books and records outside of litigation, further limited the fiduciary duties required of controlling shareholders, made it possible for judges rather than juries to decide shareholder litigation, and made it less risky for boards to approve mergers.

Like Nevada, Texas’s amended law further limits the fiduciary duties of controlling shareholders and enhances other liability protections for directors and officers.

Places like South Dakota, North Carolina, Washington, and Wyoming have also been trying to chip away at Delaware’s dominance with their own business-friendly strategies.

After Delaware lawmakers in March pushed through controversial changes designed to keep more businesses from leaving the stateGov. Matthew Meyer said the changes would maintain Delaware’s place as the best place in the world to incorporate a business — “ensuring clarity and predictability, balancing the interests of stockholders and corporate boards.”

Delaware is not in danger of a mass exodus just yet. The state touts that it is home to more than two-thirds of all Fortune 500 companies.

In 2023, Delaware hit a record 2 million total incorporations even as it saw a slight drop in the percentage of Fortune 500 companies registered there to 67.6% from 68.2% in 2022.

Delaware generated $1.33 billion in incorporation revenue from corporations in 2024, about 22% of the state’s total revenue. The state charges $250,000 to register C-Corporations and much smaller fees to register limited liability companies.

University of Pennsylvania Wharton School professor Daniel Taylor wrote in the Columbia Law School blog in March that hundreds of companies would have to leave Delaware for the resulting incorporation fee losses to have a real effect on the state’s budget and its residents.

Delaware gets a “staggering” number of LLCs and other entities, Edwards said, noting that the state pulls in more than $2 billion in total annual filing fees.

Delaware’s advantages, he said, still include more than a century of case law, corporate law-savvy judges who issue expedited decisions, and lawyers who specialize in corporate disputes, all of which make switching costs another consideration.

On the other hand, some companies could be warming up to the simplicity of Nevada’s corporate laws, which boast that they are clear, comprehensible, and easy for judges and juries to interpret, and its efforts to create a business court.

“Really to understand Delaware law, you have to be marinating in the constantly evolving case law coming out of Chancery,” Edwards said.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed.

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