High-profile corporations are leaving Delaware due to legal uncertainties introduced by the Delaware Court of Chancery. Elon Musk's reincorporation of SpaceX in Texas in 2024 accelerated this trend. Companies like Andreessen Horowitz have followed suit, reflecting shifting perceptions of Delaware's business environment. Musk's criticism of Delaware's court rulings raised concerns among executives regarding legal protections. In response, Delaware officials have begun reaching out to companies to address their concerns and have approved changes to the state's corporation laws to retain businesses.
"If the verdict in my case in Delaware is not overturned, it will be used as precedent in every fake shareholder case for every company incorporated in Delaware for the rest of time!" Musk wrote on X in 2024.
Delaware was once the go-to state to incorporate. That might be changing. A number of high-profile corporations have picked up and left the state in the last year, citing legal uncertainty and 'subjectivity' introduced by the Delaware Court of Chancery.
Delaware Gov. Matt Meyer told Business Insider in February that the state is reaching out to companies and working to address concerns. Meyers approved several changes to the state's General Corporation Law in March.
Companies incorporated in Delaware account for a substantial portion of the state's revenue. The Delaware Department of State says that close to 2 million companies, including two-thirds of Fortune 500 companies, have made the state their legal home.
#corporate-law #business-incorporation #delaware-exoduses #legal-uncertainty #company-reincorporation
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