An update on DExit, from the Corporate Census

Despite fears that Delaware’s recent judicial and legislative turmoil would trigger a corporate “DExit,” new formation data show the opposite: Delaware experienced a sharp increase in corporate incorporations in 2025, both absolutely and relative to other states.

The Specter of DExit

Is Delaware now in decline? This question became urgent with Tornetta v. Musk, a case upsetting the pay package of Tesla’s founder and influential shareholder, Elon Musk.[1] Three weeks later came Vice Chancellor Laster’s Moelis opinion constraining the power of shareholder agreements.[2] This latter opinion was criticized by some influential law firms and their clients as potentially undermining accepted market practices.[3] The Council of the Corporation Law Section of the Delaware Bar Association Counsel of the Corporate Law Section of Delaware bar association promptly proposed overturning Moelis by statute, which the legislature promptly did.[4] The legislature later substantially overturned the controlling shareholder jurisprudence undergirding Tornetta.[5]

These opinions and legislative responses have been controversial, and on both sides of the controversy is a worry that firms may flee Delaware if it mishandles this pivotal moment. For almost two years, the Delaware bar and corporate commentators have been watching public company reincorporations. Yet private companies represent the great majority of Delaware corporations – and about two thirds of Delaware’s chartering revenue. Any serious account of DExit must therefore look beyond public company migrations.[6] (more…)