Nevada Is Still Nevada
Call it DEXIT: Why the exodus from Delaware isn't about fairness; it's about control.
Over the past 18 months, companies representing more than $1 trillion in combined market capitalization have abandoned Delaware for friendlier jurisdictions. Tesla blazed the trail by moving to Texas, while Roblox and Andreessen Horowitz have chosen Nevada. These don’t seem to be random corporate housekeeping moves, so what's driving this unprecedented migration isn't what these companies claim publicly.
Some of Silicon Valley's most powerful players want you to believe that moving corporate charters from Delaware to Nevada is a principled stand. They say Delaware's courts have become too subjective, too unpredictable, too hostile to innovation, and that Nevada offers a more neutral ground, one that's pro-business, clear-headed, and respectful of management’s fiduciary decision making.
It's a compelling story. But the reality is more complex, and the evidence points in a different direction.
What we're witnessing isn't principled reform. It's DEXIT, a coordinated exodus from Delaware's established governance standards toward jurisdictions that prioritize management protection over shareholder rights.
The Reality of the Nevada Move
Nevada hasn't "really changed." It's still Nevada. And Nevada, structurally, remains one of the most pro-management, anti-shareholder jurisdictions in America. The differences aren't subtle; they're fundamental and measurable.
Where Delaware offers more robust shareholder rights, Nevada provides more limited shareholder rights. Where Delaware's courts apply established fiduciary standards, Nevada requires proof of actual fraud for shareholders to challenge freeze-out mergers. Where Delaware requires charter provisions for officer liability protection, Nevada provides stronger liability protection for directors and officers as a default feature, placing the burden of proof on parties seeking damages.
Nevada's laws protect directors and officers from liability unless there's outright fraud or knowing misconduct; a standard so high it's practically meaningless. Its courts are underdeveloped and non-specialist, lacking the institutional knowledge that makes Delaware's Chancery Court so effective. Nevada's corporate statutes prioritize reducing litigation risks for directors and officers, making it more challenging for shareholders to pursue certain types of lawsuits.
So when companies reincorporate in Nevada, they aren't optimizing for clarity or fairness. They're optimizing for insulation from accountability. Any move to Nevada represents a regression in governance standards, no matter how you dress it up with sleek logos or noble rhetoric about "innovation." The legal incentives and protections in Nevada are explicitly designed to reduce oversight and minimize exposure for those in control.
The Scale of DEXIT
The numbers tell the story. Companies that have already reincorporated in Nevada include TripAdvisor, Dropbox, Pershing Square Capital Management, Cannae Holdings, P.A.M. Transportation, The Trade Desk, and Andreessen Horowitz. But the real momentum is in the pipeline across diverse sectors: gaming (Roblox), entertainment (Sphere, Madison Square Garden entities, AMC Entertainment), AI and biotech (Tempus AI, Revelation Biosciences), and various other companies have all announced Nevada reincorporation proposals.
This isn't a collection of boring, well-governed blue-chip companies quietly optimizing for operational efficiency. This is a diverse group of companies that have experienced complex governance situations, regulatory challenges, and shareholder disputes. The list includes meme stocks, entertainment conglomerates, biotech startups, AI companies, and even an activist hedge fund. What unites them isn't a shared commitment to better governance; it's a shared interest in different governance frameworks with fewer constraints on management discretion.
The "proposed" versus "completed" distinction reveals the accelerating nature of this trend. Many companies are still working through the reincorporation process, suggesting we might be seeing the early stages of a much larger corporate migration. The momentum appears to be building, and the precedent is being set.
Who's Really Leading This Movement?
Tesla's reincorporation to Texas tells a particularly revealing story. After Delaware courts struck down Elon Musk's $56 billion compensation package, a decision that highlighted the board's lack of independence and the package's disconnection from performance metrics, the company initially explored Nevada as an alternative. According to University of Virginia corporate law professor Michal Barzuza, Nevada was likely the preferred destination all along, given that Musk had already incorporated his X holding company there and brought Twitter into Nevada after taking it private.
The reason Tesla ended up in Texas instead reveals the underlying dynamic at play. As Barzuza explains, because Tesla is publicly traded and Musk is considered a controlling shareholder, a move to Nevada would likely trigger Delaware's "entire fairness standard"; the same heightened scrutiny that invalidated the compensation package. Nevada's significantly stronger protections for directors and officers could make such a move appear as self-dealing, requiring approval from a "majority of the minority" shareholders and independent board oversight.
This pattern across the Musk corporate empire (X in Nevada, Neuralink in Nevada, Tesla in Texas) suggests these moves aren't principled responses to Delaware's 'subjectivity' but calculated decisions to find the most accommodating legal framework available while avoiding additional scrutiny.
Andreessen Horowitz, the venture capital firm that's become synonymous with founder-friendly governance, moved to Nevada while simultaneously objecting to Delaware's "unprecedented subjectivity." But a16z isn't just any investor. They've been vocal advocates for dual-class share structures, publishing detailed defenses of such arrangements (https://a16z.com/limit-dont-ban-dual-class-share-structures/), and many of their portfolio companies including Facebook, Google, Lyft, and others have adopted these structures upon going public. They're the architects of board control provisions and protective clauses that concentrate power in the hands of founders and their allies. Delaware courts have increasingly scrutinized these arrangements, especially when VCs blur the lines between fiduciary duty and self-interest. Nevada offers a more comfortable environment for firms that want to maintain that leverage without legal friction.
Bill Ackman's Pershing Square is reincorporating in Nevada, with Ackman stating that "top law firms are recommending Nevada and Texas over Delaware." This comment reveals something important: these moves aren't isolated decisions by individual executives but part of a coordinated shift being actively promoted by the legal establishment that serves these companies. Reports indicate that Ackman, along with other prominent executives, is looking to states like Nevada and Texas to potentially have courts that are "less permissive of lawsuits from shareholders and boards of directors." This comes from the same investor who built his reputation challenging questionable governance practices at companies like Herbalife, a Cayman Islands-based company that used Nevada-incorporated subsidiary LLCs. Ackman spent years scrutinizing corporate structures designed to limit accountability, yet now seeks Nevada's weaker oversight for his own fund.
The pattern becomes clear when you look beyond the marketing materials. AMC Entertainment, fresh from the APE preferred stock controversy that effectively diluted shareholders, executive compensation packages that raised eyebrows during financial distress, and strategic pivots including investments in gold mining operations, is proposing to move. Madison Square Garden's entertainment and sports entities, with their complex ownership structures and related-party transactions, are seeking Nevada's protections. Roblox, facing ongoing regulatory scrutiny over its platform's safety and monetization practices, has announced reincorporation plans.
These are companies seeking different governance frameworks that provide greater management flexibility and reduced regulatory oversight.
The Disconnect Between Rhetoric and Reality
What makes DEXIT so concerning isn't just the act itself; it's the sophisticated storytelling around it. Tesla's move came immediately after Delaware's Chancery Court ruled that the compensation package was the product of a compromised board that failed to negotiate at arm's length. The court didn't go rogue or apply new standards; it applied the same fiduciary principles it's been refining for decades. It ruled against a clearly conflicted board and a pay package that defied any reasonable proportionality to performance.
Andreessen Horowitz framed their move as a protest against Delaware's "unprecedented subjectivity," but what they're really objecting to isn't subjectivity; it's oversight. Delaware courts have become more aggressive in scrutinizing venture capital board control, especially in cases where VCs structure deals to maintain leverage while claiming fiduciary status. When Delaware judges start asking hard questions about whether a VC is truly independent or whether they're advancing their own interests at the expense of other shareholders, the solution isn't to find a better court system. It's to find a more accommodating one.
The rhetoric is carefully crafted to sound principled while obscuring the real motivation. "Innovation-friendly" becomes code for "regulation-light." "Predictable" means "accommodating to management." "Modern" translates to "less accountable." This creates a significant disconnect between the stated reasons and the practical effects.
Even more dangerous is how this framing creates reputational cover for others to follow. When marquee names like Tesla and a16z make these moves while wrapping them in the language of principle and progress, they're laying the narrative groundwork for future actors to point to their moves and say, "This isn't a red flag. This is just what forward-thinking companies do now." That's how norms get eroded, not through dramatic breaks, but through the gradual normalization of what was once considered suspect.
What This Means for Investors
For investors, Nevada reincorporation should trigger a yellow flag. While not automatically disqualifying, it signals that management is optimizing for reduced oversight rather than operational excellence. The structural differences between Delaware and Nevada create measurable legal distinctions with real financial consequences; Nevada's laws explicitly prioritize reducing litigation risks for directors and officers while requiring proof of "actual fraud" for shareholders to challenge questionable decisions. Nevada's courts also make it more difficult for shareholders to obtain specific performance; court orders that force companies to take specific actions rather than just pay damages. Delaware's Chancery Court regularly compels merger completions or board actions, but Nevada's management-friendly orientation leaves shareholders with fewer tools to force corporate compliance. This pattern of management seeking jurisdictional protection from oversight echoes broader trends in governance roadblocks across different asset classes, where sophisticated defensive tactics systematically reduce shareholder leverage.
Current regulatory frameworks are ill-equipped to address this erosion of accountability. The SEC's disclosure requirements don't capture the practical implications of reincorporation choices, and state-level competition for corporate charters creates a race-to-the-bottom dynamic. While institutional investors like CalPERS have begun scrutinizing Nevada-incorporated companies more closely and rating agencies are considering governance flags, these market-based responses are reactive rather than preventive. The regulatory vacuum creates space for continued governance deterioration while companies wrap jurisdictional arbitrage in the language of innovation and progress.
What DEXIT Really Represents
This trend isn't just about venue shopping; it's about a systematic erosion of corporate accountability that's being rebranded as modernization. The danger isn't in any single reincorporation; it's in the normalization of this shift away from established governance standards. If Delaware represents an imperfect but functioning ecosystem of legal boundaries and fiduciary review, Nevada is the exit ramp for companies that find those boundaries inconvenient.
The broader pattern reveals something troubling about the current state of corporate governance. Founder control is increasing across Silicon Valley and beyond. Board independence is thinning as companies stack their boards with allies and insiders. Legal accountability is being systematically rebranded as obstruction to innovation. These moves to Nevada aren't isolated incidents; they're the legal reflection of a deeper cultural drift toward concentrated power and reduced oversight.
The ideology is simple: we know best, trust us, stay out of the way. Whether that trust is deserved is the question that Nevada's legal system is explicitly designed not to ask. The irony is that Nevada didn't change to attract these companies; it was always this way. Only the storytelling changed, and apparently, that was enough to spark this corporate migration.
DEXIT isn't just about corporate domicile; it's about corporate accountability. And right now, accountability is losing.
The Bigger Picture
The pattern is loud, the scale is significant, and the implications are clear. We're building a fuller picture of what this shift really means for corporate governance and investor protection. The companies making these moves may claim they're seeking fairness, but their actions suggest they're seeking something else entirely: freedom from accountability, dressed up as principle.
The governance innovation doesn't stop at reincorporation. Meta's recent purchase of a 49% minority stake in venture capital firm NFDG, founded by two of its AI recruits, signals something larger: the lines between tech companies, venture capital, and private equity are blurring as AI competition reshapes corporate strategy. These hybrid arrangements create influence and alignment without traditional accountability structures, and they're becoming more common as tech giants evolve into infrastructure hungry holding companies. We might have more to say on how this trend is reshaping M&A dynamics, including why companies like DigitalBridge Group (DBRG) could attract a much broader universe of strategic acquirers than traditional event paths would suggest.
I’ll be writing more on governance, activism and investment process. I’ve lived and breathed these for years. I’ve also written about tokenization, Formula One, the NBA, and sometimes just tell a story worth remembering. Stay tuned.
You can also find me on twitter at @MrMojoRisinX.