Why Big Companies Are Ditching Delaware: Is the Corporate Capital Losing Its Grip?

Delaware for decades has been the undisputed capital of American corporate life. More than two-thirds of Fortune 500 companies call the tiny eastern state their legal home, drawn by its business-friendly courts and flexible laws. But now, in what commentators have dubbed 'Dexit', some of the biggest names in business are packing up and leaving.

Last year, when a Delaware judge struck down Elon Musk's eye-watering $56 billion pay package from Tesla, the world's richest man didn't hold back his fury. 'Never incorporate your company in the state of Delaware,' he thundered on X. Within months, both Tesla and his rocket company SpaceX had upped sticks for Texas.

But Musk wasn't alone in his discontent. A cascade of corporate departures has followed, each one sending ripples through Delaware's corridors of power and moved towards potential states like Florida and Nevada.

Trump's Media Empire To Leave Delaware

Trump Media & Technology Group, the media and technology company owned by US President Donald Trump–which operates the social media platform Truth Social–officially reincorporated from Delaware to Florida on April 30, 2025, following shareholder approval at its annual meeting.

CEO Devin Nunes cited Florida's pro-business environment and respect for the rule of law as key factors in the decision. The move aligns the company's legal domicile with its Sarasota headquarters, reflecting a broader trend of companies seeking more favourable regulatory climates.

This shift comes amid growing dissatisfaction with Delaware's legal environment, particularly after a court ruling invalidated Elon Musk's $56 billion Tesla compensation package, prompting some firms to reconsider their incorporation choices.

More Tech Firms Exit the State

Other firms that have exited include Dropbox, The Trade Desk, and Cannae Holdings. These firms have officially shifted their corporate domiciles from Delaware to Nevada, aligning with a broader trend of companies seeking more favourable legal environments.

Dropbox finalised its reincorporation on March 5, 2025, following board approval and consent from major shareholder and CEO Drew Houston.

Meanwhile, shareholders of The Trade Desk–a global advertising company–approved the move during a special meeting on November 14, 2024, after a Delaware Chancery Court ruling confirmed that only a simple majority vote was required for such a conversion.

Lastly, on June 20, 2024, after receiving shareholder approval, financial services company Cannae Holdings completed its transition.

Two More Set to Vote for Exit

Simon Property Group and Roblox are among the latest companies seeking to exit Delaware as their state of incorporation in 2025. Simon Property Group, the nation's largest shopping mall owner, has proposed reincorporating in Indiana, citing Delaware's increasingly litigious environment and a preference for a more predictable legal framework.

Similarly, Roblox has announced plans to reincorporate in Nevada. The company's board and Nominating and Corporate Governance Committee determined that Nevada's statute-focused corporate law aligns better with Roblox's culture of innovation and provides a more predictable legal environment. They believe this move will support the company's mission and shareholder value.

Why Delaware Has Been a Top Choice?

Delaware remains the top choice for US corporate incorporation due to its well-established legal framework, business-friendly court system, and flexible corporate laws. Over 66% of Fortune 500 companies are incorporated in Delaware, drawn by the expertise of its Court of Chancery, which specialises in corporate disputes and offers predictability without juries.

Delaware's General Corporation Law is considered one of the most advanced and flexible in the country. It gives companies significant leeway in structuring governance and operations. Additionally, the state offers efficient filing processes and strong protections for directors and officers.

Delaware provides a stable legal environment and investor confidence for startups and large enterprises alike, which continues to outweigh recent controversies for many corporations evaluating where to incorporate.

Response to 'Dexit'

In response to the mass exodus of companies, the state enacted Senate Bill 21 (SB 21) in March this year. This legislation amends the Delaware General Corporation Law to provide greater clarity and predictability to corporate fiduciaries, aiming to restore balance and attract corporations back to the state.

SB 21 modifies Section 144, allowing transactions involving interested directors, officers, or controlling stockholders to be insulated from fiduciary breach claims if specific "cleansing mechanisms" are used. Specifically, the bill requires only one of two procedural safeguards—either approval by independent directors or informed minority shareholders—rather than both, as previously mandated.

Despite the controversy, Delaware's swift legislative action underscores its commitment to maintaining its status as the premier destination for corporate incorporation.

For Delaware, this is more than just a policy debate—it's an existential question. The state has built its identity around being America's corporate home. Take that away, and what's left?