DExit: Not Widely Adopted, But An Increasingly Popular Board Conversation

Companies are increasingly beginning to wonder if being incorporated in Delaware, compared to other jurisdictions like Nevada or Texas, is in the best interest of the Company and its shareholders.

Once an almost unthinkable conversation, boards’ and management teams’ willingness to consider reincorporation has been driven by recent legal developments in each state – namely recent legal decisions in Delaware and legislative changes from Texas and Nevada to compete for corporate charters. This topic picked up enough steam for it to earn its own nickname: “DExit,” and recent high-profile examples of companies reincorporating (or announcing their intention to reincorporate) have only further spurred this discussion.

The reasons to pursue reincorporation are different for every company, but common reasons include: incorporating in a state where the Company is based or headquartered, seeking to reduce frivolous litigation, improving predictability in “pro-business” courts, and lowering liability exposure for officers, amongst others. Nevada provides the broadest protection from statutory liability. Texas provides companies with the option to adopt minimum thresholds for shareholders to file a derivative lawsuit or a shareholder proposal, and proxy advisors may eventually have to make certain disclosures if their recommendations rely on nonpecuniary factors.

Leaving Delaware is not for every company. Delaware still is, and will remain for the foreseeable future, the default state of incorporation for publicly traded companies.

The DExit trend (if it even becomes a trend) is still in its infancy. With that said, from a very small base, the conversation continues to grow and more companies have begun asking for shareholder approval to reincorporate outside of Delaware. For the purposes of this analysis, we focused solely on reincorporation proposals from Delaware to Nevada or Texas – ignoring proposal from or to other jurisdictions. For context, the below chart includes 23 of the 36 total reincorporation proposals put forth by U.S. issuers in 2025: