Tom Hals
5 min read
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By Tom Hals
WILMINGTON, DEL. (Reuters) -In the coming weeks, investors in nine public companies worth at least $1 billion each will vote on proposals to ditch Delaware as their place of incorporation, potentially denting the state's longtime reputation as Corporate America's capital, Reuters has found.
Five companies with a stock market value of at least $1 billion have moved their legal home out of Delaware since last year, in what some have nicknamed "Dexit." Tesla made a high-profile move to Texas last year and in April, President Donald Trump’s social media company Trump Media & Technology, which owns the Truth Social platform, decamped to Florida.
Most of the companies are dominated by a significant shareholder or founder. Delaware judges have expanded the court's most stringent legal standard to a growing range of situations involving controllers, increasing the risk of shareholder lawsuits. The decisions culminated with the blockbuster ruling last year that rescinded Musk’s $56 billion pay package from Tesla.
Less than an hour after the ruling, Musk said on X: “Never incorporate your company in the state of Delaware.”
Musk’s SpaceX and Tesla soon reincorporated in Texas. Musk did not respond to a request for comment.
Trump Media, which is controlled by a trust that owns shares on behalf of President Trump and is overseen by his oldest son, said in its March proxy statement that Delaware's "increasingly litigious environment facing corporations with controlling stockholders has created unpredictability in decision-making.”
The company cited the Musk pay ruling as an example. It is now incorporated in Florida. Dropbox and The Trade Desk, which each has a large shareholder, and Cannae Holdings have moved their charter to Nevada from Delaware. They did not respond to a request for comment.
Among the companies set to vote on proposals to leave are Simon Property Group, which is seeking shareholder approval on Wednesday to reincorporate in Indiana, and gaming platform Roblox, which wants to move to Nevada.
Unlike many of the other companies that have proposed a "Dexit," Simon does not have a controlling shareholder. It declined to comment on its reasons for proposing a move, referring to its latest proxy statement. Roblox said that Nevada law provides greater predictability.
To be sure, the share of Delaware-based companies in the Russell 3000 index, which covers nearly all public companies, continues to grow, rising to 62% last year from 56% in 2020, according to ISS-Corporate. However, 2024 was the first year that more companies in the Russell Index left Delaware than moved their incorporation to the state.
