Corporate Migration: Why Companies Are Leaving Delaware for Nevada
Delaware has been the go-to state for corporate registration in the United States for decades. Over 60% of Fortune 500 companies are registered in Delaware, drawn by its well-developed body of corporate case law, business-friendly courts, and sophisticated Chancery Court. But that dominance is starting to erode.
In the first half of 2025, a wave of major corporations and investment firms announced plans to leave Delaware in favor of Nevada. From Silicon Valley tech firms to biotech startups and hedge funds, a growing list of companies is seeking shelter in the Silver State.
Why now? And what does it mean for corporate governance going forward?
Who’s Moving?
Here's a look at the companies making headlines for redomiciling to Nevada:
Why Nevada?
Companies cite several compelling reasons for their move:
Lower Franchise Taxes Delaware imposes franchise taxes that can exceed $250,000 per year for some companies. Nevada charges a flat $500 business license fee and $200 annual list fee—a dramatic cost reduction that adds up quickly for large corporations.
Statute-Focused Law Unlike Delaware's common law system that relies heavily on judicial decisions, particularly from the Court of Chancery, the Nevada Revised Statutes (NRS) Chapter 78 lays out corporate governance rules in clear, prescriptive terms. Nevada courts emphasize the text of the statute rather than prior case law. This perceived clarity appeals to boards and general counsels who want predictable outcomes.
Management-Friendly Protections Nevada's laws include robust director indemnification clauses and more restrictive shareholder inspection rights:
NRS § 78.037 allows corporations to completely eliminate personal liability of directors and officers in the articles of incorporation, even for breaches of fiduciary duty
NRS § 78.7502 and § 78.751 allow corporations to indemnify directors and officers to the fullest extent permitted by law, including expenses, settlements, and judgments—even if they are unsuccessful in defending a claim
NRS § 78.105 limits inspection rights to shareholders that own at least 15% of outstanding shares or have held shares for at least 6 months, and restricts inspection to articles of incorporation, bylaws, shareholder lists, and certain board resolutions
Lower Litigation Risk Delaware's Chancery Court has become a magnet for shareholder litigation. There's been a notable rise in stockholder challenges to board decisions, even when transactions are approved by disinterested shareholders. Delaware courts continue to scrutinize deal processes extensively, especially when controlling shareholders are involved. This increase is particularly evident in:
Derivative suits: Shareholders sue on behalf of the corporation, often claiming breach of fiduciary duty
M&A-related lawsuits: Virtually every announced merger or acquisition involving a Delaware corporation attracts at least one challenge
Books and records actions: Delaware courts are increasingly permissive in granting shareholders access to internal documents to investigate potential wrongdoing
Nevada's NRS deliberately makes shareholder lawsuits harder to file and win. NRS § 78.138–139 codifies the business judgment rule, creating a strong presumption that directors and officers act in good faith and that business decisions were made with care and loyalty. Critically, shareholders must prove malfeasance by clear and convincing evidence—a higher standard than Delaware's preponderance of evidence requirement.
Delaware Fights Back
The exodus hasn't gone unnoticed. In March 2025, Delaware enacted Senate Bill 21, which added "safe harbor" rules for controlling shareholder transactions and clarified director obligations. This legislation represents a deliberate attempt to rebalance the scales between management and shareholders, making Delaware law more predictable and management-friendly.
Key Changes Under SB21:
Enhanced Transaction Protections (DGCL § 251(h) & § 271) The legislation codifies a dual-approval "safe harbor": when a transaction receives approval from both an independent special committee and a majority of minority shareholders, courts must apply business judgment rule deference. This provides greater certainty for controlling shareholder transactions that previously faced heightened scrutiny.
Strengthened Director Protections (DGCL § 144(a)) The revised section clarifies that directors cannot be held liable for good faith business mistakes if the board maintains a reasonable monitoring system. This shields directors from Caremark-style oversight claims unless plaintiffs can demonstrate bad faith or systematic failure to implement basic reporting and monitoring controls.
Restricted Inspection Rights (DGCL § 220) Corporations can now limit inspection rights in their governing documents, reducing obligations to produce internal emails or informal communications. Access is generally restricted to formal board materials rather than raw internal data, unless plaintiffs demonstrate credible evidence of wrongdoing.
Judicial Developments Delaware's Supreme Court has also signaled a more management-friendly approach. In February's Maffei, et al. v. Palkon, et al., Delaware's Supreme Court court reversed a Chancery Court’s decision, restoring the business judgment rule as the default standard for reviewing corporate reincorporations. This marked a significant pullback from the intensive judicial scrutiny that had characterized recent Delaware jurisprudence.
Despite these reforms, the perception persists that Delaware's legal environment has grown unpredictable and, for some industries, hostile to innovation and rapid governance decisions. The challenge for Delaware isn't just legislative—it's reputational. Years of high-profile litigation and activist-friendly rulings have created a narrative that may be difficult to reverse, even with pro-management reforms.
The Bigger Picture: A Governance Realignment
Delaware is no longer the uncontested king of corporate charters. Companies are signaling they want:
Lower compliance costs
Predictable legal standards
Protection against activist litigation
Nevada is positioning itself as the new haven for innovation-first firms—particularly those in AI, biotech, and cryptocurrency—who prioritize speed, clarity, and control over traditional governance structures.
While Delaware still holds significant institutional advantages, 2025 may mark the year we entered a new phase in the American corporate legal landscape. Welcome to the era of "Dexit."
