The corporate landscape in the United States is shifting as a growing number of companies are making the choice to “DEXIT.”
And by DEXIT, we mean a transaction in which a company leaves Delaware as its state of formation by redomiciling in another state.
The Mechanics of the Move
The redomiciling is typically done by either (1) a statutory “conversion” from one form of entity to another by filing with applicable secretaries of state and without any merger or transfer of assets or (2) a statutory “merger” into a newly formed entity in the destination state.
In either case, the result is that the company’s internal affairs are no longer governed by Delaware entity law and thereafter are governed by the laws of the destination state. Texas is often selected as the new domicile for the entity, particularly where the entity has significant operations in Texas. Some companies that have made this move include ArcBest Corporation, Coinbase Global, Dell Technologies, Inc., Dillards, Tesla, Voyager Technologies and Zion Oil & Gas. EXXON Mobil Corporation is moving from New Jersey to Texas.
The underlying DEXIT transaction is commonly described in filings with the Securities and Exchange Commission as a “reincorporation” or “redomiciling” from Delaware to another state. Companies typically will implement the move by filing articles of conversion or merger after the requisite governing jurisdiction law approvals by the entity’s directors and owners and filings with the secretaries of state of Texas and Delaware or by merging a Delaware corporation with or into a wholly-owned subsidiary formed under the Texas Business Organizations Code, with the surviving entity governed by the TBOC, often with a one-for-one share conversion and continuity of the business and its governing persons and employees.
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Texas Rolls Out the Red Carpet
Texas is a frequently considered a DEXIT destination because it is considered to be a business-friendly state with a newly formed Business Court, amended TBOC and favorable state taxes. Recent amendments to the TBOC were worked on by the Codification Committee of the Business Law Section of the State Bar of Texas and the Texas Business Law Foundation, a Texas nonprofit corporation whose members are largely Texas entities. The TBOC amendments are often cited favorably in corporate DEXIT announcements. The 2025 amendments to the TBOC make it more difficult to sue board members of companies incorporated in Texas and make it more challenging for shareholders to file stockholder proposals against Texas companies.
The Texas Legislature has capitalized on executives’ frustrations with the Delaware Chancery Court by establishing the new Texas Business Court to provide a venue for significant business and commercial disputes, which began hearing cases in 2024 and is staffed by judges appointed by the governor rather than elected with at least 10 years of relevant experience. In 2025, the TBOC was amended to allow Texas entities to include in their governing documents provisions providing that internal entity claims must be brought in the Texas Business Court.
Redomiciling a company to Texas alone is not as significant to others as moving its headquarters or operations to Texas. While it brings prestige to the state, redomiciling a corporation does by itself not always bring significant economic benefits.
Texas is seeking to attract public company stock listings on the new Texas Stock Exchange in Dallas. Both Nasdaq and the New York Stock Exchange have recently launched Texas listing venues.
Shareholder benefits of DEXIT to Texas cited in SEC filings include:
- Substantial operations in Texas. Companies redomiciling to Texas often cite their significant operations in Texas while having only nominal operations in Delaware and the benefits of being incorporated in the state where relevant laws are made and adjudicated.
- New Texas Business Court. Frustration with the Delaware Court of Chancery has led directors and executives to consider redomiciling to Texas. In Tornetta v. Musk, the Chancery Court had voided the $56 billion equity compensation package of Tesla’s CEO, which was approved by its shareholders, although the rescission remedy decreed in the Chancery Court’s initial decision was overturned two years later by the Delaware Supreme Court, which reduced the remedy to damages awarded of $1 and the plaintiffs’ attorneys’ fees award from $356 million to $55 million.
- Greater certainty for corporate decision-making. The change made to the TBOC in 2025 strengthen Texas’ already strong deference to the business judgment of independent directors to create a statutory presumption applies to Texas corporations whose securities are listed on a national securities exchange or include in their governing documents to be governed by TBOC § 21.401.
- Cost savings for the company. Delaware derives significant revenue from its franchise tax, which for some companies is $250,000, solely due to its being incorporated in Delaware, and that is in addition to Delaware income taxes based on its operations in Delaware, whereas Texas’ margin tax is derived from the entity’s revenues from its Texas operations.
DEXIT to Texas is accelerating to the benefit of Texans.