Mark Zuckerberg’s Meta Platforms is among several companies reportedly considering reincorporation outside Delaware. In response, Delaware lawmakers passed a bill on Tuesday night aimed at preventing a potential mass exodus, dubbed “DExit,” as companies explore moving to states like Texas or Nevada.
Delaware, home to 2.2 million incorporated entities and 81% of U.S. IPOs last year, introduced Senate Bill 21 to maintain its status as a top corporate hub. Governor Matt Meyer emphasised that the bill ensures clarity, predictability, and balance between stockholders and corporate boards.
The new law benefits companies with controlling shareholders—like Meta—by redefining how such shareholders are classified and easing the process for deals involving conflicts of interest. It also restricts minority shareholders’ ability to inspect company records.
Critics argue the bill, rushed through multiple amendments since its introduction on February 17, primarily serves wealthy executives and weakens Delaware’s Chancery Court’s oversight. The International Corporate Governance Network warned that it could negatively impact long-term investor returns, including retirement funds.
Concerns over a DExit arose after the Chancery Court voided Elon Musk’s $56 billion Tesla compensation package in early 2024. Following the ruling, Musk relocated SpaceX to Texas, with Tesla following after a shareholder vote. In February 2024, he urged other companies to leave Delaware.
Since then, several companies, including Dropbox and Bill Ackman’s Pershing Square Management, have considered reincorporation elsewhere. Trump Media & Technology Group has also sought shareholder approval to exit Delaware. Meta, reportedly exploring a move to Texas, previously relocated its trust and safety team there as part of a broader strategy to align with former President Donald Trump.
Following reports of Meta’s potential departure, Meyer held meetings with attorneys representing Musk, Meta, Tesla, and other firms involved in Delaware shareholder disputes. CNBC reported additional meetings between state officials and lawyers to discuss corporate franchise laws.
Meta has been under shareholder scrutiny in Delaware, with ongoing “books and records” investigations into potential financial damages linked to Zuckerberg and company directors. However, with SB 21 now in effect, any new cases filed after its introduction will be subject to the revised legal framework, limiting shareholder rights under previous state laws.