Elon Musk has a Rolodex of feuds: US President Donald Trump, “212” rapper Azealia Banks, and even a British diver who helped save a Thai soccer team stuck in a flooded cave.
In 2024, he set his sights on Delaware.
Although Delaware is generally considered a business-friendly state with a robust corporate legal system, Musk tried to shatter that reputation after a judge at Delaware’s Court of Chancery denied his multi-billion-dollar pay package, which was approved by Tesla’s board. In typical Musk fashion, he used his X account as a megaphone to blast the court and urged others to incorporate their business elsewhere.
“Companies should get the hell out of Delaware,” Musk wrote last August. Musk moved SpaceX and Tesla from Delaware to Texas in 2024.
Some prominent companies have since followed Musk out of the state.
VC firm Andreessen Horowitz is the most recent high-profile company to exit Delaware because, the company said in a blog post, recent rulings by the Court of Chancery had undermined its “reputation for unbiased expertise.”
Companies like Roblox, Dropbox, and Trump Media have also left the state.
Texas, Nevada, Florida, and Wyoming have become preferred destinations for some business leaders in a shift that some have dubbed “Dexit,” a reference to the UK’s withdrawal from the European Union, known as Brexit.
The state’s historical dominance as a destination for companies to incorporate is rooted in the Delaware General Corporation Law, a business-friendly statute that acts as the bedrock of its corporate law. Companies leaving Delaware might do so for various reasons, including privacy or tax preferences, but for Musk, it’s about finding greener legal pastures.
For its part, Delaware isn’t overly worried.
Dexit? Not according to Delaware.
Attorneys and state officials still consider Delaware the premier destination for corporations, despite Musk’s criticism.
“Yes, there has been some political rhetoric about leaving Delaware,” Delaware Secretary of State Charuni Patibanda-Sanchez told Business Insider. “What our data is showing is that Delaware is still the preeminent place to incorporate your business.”
Patibanda-Sanchez’s office oversees the Division of Corporations, which says the state was home to over 2.1 million corporations and two-thirds of Fortune 500 companies in 2024. Still, the number of business entities formed in Delaware has slowed slightly, falling from about 313,000 in 2022 to about 289,000 in 2024.
Joshua Margolin, a partner at Selendy Gay who is familiar with corporate governance in Delaware, told Business Insider that the state’s decadeslong experience navigating corporate disputes is a big reason the state remains a top destination.
“You’ve got judges who sit on the Court of Chancery who have spent their entire careers litigating corporate disputes,” Margolin said. “That is invaluable to have that experience on the bench when you’re bringing a dispute, whether you’re the plaintiff or the defendant.”
Margolin added that Delaware has a “breadth and depth of case law and precedent that I don’t think other states can rival.”
“I think if you went back over time, you’d see various states creating business courts that are in one way or another meant to try to mirror the expertise of the Court of Chancery,” he said.
Lindsey Mignano, founding partner of SSM Law PC, which represents emerging tech companies, said Delaware remains the “simplest, most cost-effective choice” for business founders.
Mignano said many of the documents related to governing financing for startups are based on Delaware corporate law, meaning attorneys would need to adopt those templates to fit the requirements of other states.
“This is an expensive lift from a practical perspective,” Mignano said.
Patibanda-Sanchez said, for now, the state isn’t sweating.
“We don’t believe that Delaware’s position as the corporate leader and corporate capital of the world is being threatened in any significant way,” Patibanda-Sanchez said. “We always come under threat, though, because states are always trying to get a piece of the action.”
In February, Delaware Gov. Matt Meyer told Business Insider that things may “need to change” as companies considered leaving the state. Meyers approved changes to Delaware’s corporate law in March. This month, Delaware’s Court of Chancery said it would automate its process for case assignment, which could address concerns of bias.
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