Dexit Averted? Corporate (Re-) Domestication After SB 21

By Ankita Sangwan and Arsalan Jamal

Since mid-2024, several high-profile companies left Delaware, citing a series of rulings from the Court of Chancery that they perceive as insufficiently protective of corporate decision-making. Those include SpaceX and Tesla, which both reincorporated in Texas, and Dropbox, which moved to Nevada.

In response, Delaware recently amended the Delaware General Corporation Law (“DGCL”) with what is commonly referred to as Senate Bill 21 (“SB 21”). The most consequential corporate law reform in decades, SB 21 claims to provide greater clarity and predictability to corporate fiduciaries.

Responses to SB 21 have been decidedly mixed, with some dubbing it “the billionaire’s bill.” Further, while some Chancery Court watchers characterize the defections, or “Dexit,” as a trend, others are confident that the Delaware Court, with its many strengths, will continue to dominate corporate incorporations.

On November 11, 2025, the Benjamin N. Cardozo School of Law’s Heyman Center for Corporate Governance hosted a CLE program titled “Dexit Averted? Corporate (Re-) Domestication After SB21.” Moderated by Gustavo Bruckner of Pomerantz, the panel featured leading attorneys and corporate governance scholars to discuss the long-term implications of SB 21, whether corporations are truly “fleeing” Delaware, the potential impact of SB 21 on shareholder litigation, and how other states such as Nevada and Texas have positioned themselves as alternative business-friendly jurisdictions. Following is a summary of the program.

What is SB 21?

SB 21 amends two key sections of the DGCL.

• Section 144: SB 21 amends this section to establish three safe harbors for conflicted transactions that, if met, insulate a director or officer from equitable relief and awards of damages for claims based on alleged breaches of fiduciary duties. These provide a far less demanding standard of judicial review than Delaware’s “entire fairness” standard. The points below are excerpted from the Original Synopsis of SB 21 by the Delaware General Assembly. The amendments:

o provide safe harbor procedures for acts or transactions in which one or more directors or officers as well as controlling stockholders and members of control groups have interests or relationships that might render them interested or not independent with respect to the act or transaction.

o define what parties constitute a controlling stockholder or control group and provide safe harbor procedures that can be followed to insulate from challenge specified acts or transactions from which a controlling stockholder or control group receives a unique benefit.

o provide that controlling stockholders and control groups, in their capacity as such, cannot be liable for monetary damages for breach of the duty of care. The amendments do not displace any safe harbor procedures or other protections available at common law.

• Section 220: This section has been amended so that the materials available to shareholders pursuant to books-and-records demands are more narrowly circumscribed outside of certain specific exceptions.

Are Companies Really Leaving Delaware?

During the 2025 proxy season, 18 of 28 companies (64.3%) with reincorporation proposals on their ballots proposed leaving Delaware (vs 23.5% in 2024) – most for Nevada, and a few for Texas. Many of these proposals involved companies with controlling shareholders.

Still, the panel agreed that despite headline-grabbing moves like Tesla’s departure, the predicted wave of reincorporation did not materialize. Delaware’s deep precedent and specialized courts continue to be the leading factors behind its enduring dominance for corporate incorporation.

Has SB 21 impacted or changed corporate decision-making?

The panelists were split. While Edward Rock of NYU and Eric Talley of Columbia called SB 21 a major shift expanding corporation discretion, Phil Richter of Fried Frank noted that real-world impact may remain modest until Delaware courts weigh in.

How Are Other States Responding?

Texas and Nevada, in recent developments and in reaction to SB 21, have updated their statutes to appear more “corporate friendly,” with Nevada even moving toward a business court modeled on the Court of Chancery. Several public companies—including Fidelity National Financial, Roblox, AMC Networks, Sphere Entertainment, and Tempus AI—have recently relocated to Nevada.

However, Richter highlighted two reasons Delaware continues to dominate: (1) extensive legal precedent; and (2) document precedent. He emphasized that Delaware’s extensive and well-developed body of case law provides attorneys with consistency and predictability when novel issues arise—an essential foundation for informed corporate decision-making. Richter also noted that Delaware leads in what he termed “document precedence,” referring to the widespread standardization and “Delawarization” of corporate documents. This uniformity enables lawyers to prepare materials for courts and opposing counsel with greater accuracy and efficiency.

Together, these make relocating a riskier and costlier proposition.

Case to Watch: Rutledge v. Clearway Energy Group LLC (2025)

A pending Delaware Supreme Court case – the first major test of SB 21 – may determine the statute’s constitutionality and the broad nature of its safe harbor provisions.

In Clearway, the Court will decide whether the safe harbors created by SB 21 violate the Delaware Constitution by improperly stripping the Court of Chancery of its equitable jurisdiction.

Final Thoughts

Panelists noted that Delaware corporate law evolved incrementally through landmark cases, and SB 21’s impact will only become clear as courts apply it in practice. By comparison, states like Nevada and Texas lack the depth of precedent that provides predictability in Delaware, making it harder for them to attract companies considering reincorporation.

As Delaware courts begin shaping SB 21 through cases like Clearway, Pomerantz continues to monitor developments. Says Gustavo Bruckner, Partner and head of the firm’s Corporate Governance practice, “Pomerantz remains committed to protecting the rights of our stockholder clients and will continue to be vigilant at legislative efforts seeking to limit those rights.”