Delaware v. Texas: 5 Strategies for Evaluating Reincorporation Options

Delaware has long been the default jurisdiction for most U.S. public companies because of its well-established corporate laws and highly respected judiciary and corporate bar. Yet recent Delaware court rulings and increased competition from alternative jurisdictions have prompted some boards to reassess whether Delaware remains the best fit for their company’s needs, and Texas has emerged as a competitive option.

Reincorporation decisions are highly fact-specific and require careful exercise of board judgment. In this brief, we outline five strategies that boards may consider as they evaluate reincorporation options.

1. Review Shareholder Proposal Thresholds

In 2025, Texas established stricter ownership thresholds for shareholders to submit proxy proposals, which Texas corporations that either have their principal office in Texas or are listed on a Texas stock exchange can opt into. Non‑majority owned companies exploring reincorporation should review these thresholds and the varying approaches that boards have taken to navigate them. The thresholds may curb low‑stakes activism and focus board time on material proposals, reducing distraction and compliance overhead in the proxy season. Nevertheless, the stricter thresholds may prove unpopular with institutional investors, who may believe that they weaken shareholder rights rather than protect them.

2. Understand the Litigation Landscape

The Delaware Court of Chancery’s deep experience and extensive body of case law underscore the strength of Delaware’s reputation as a leading corporate law jurisdiction. Texas, however, has taken steps to create a litigation landscape that many companies will find appealing. These steps include establishing a dedicated business court, codifying the business judgment rule, limiting derivative claims, and mandating deference to the decisions of disinterested directors about company transactions with related parties. Taken together, this landscape can deter opportunistic suits and give boards confidence to take informed and disciplined risk. For its part, Delaware has enacted several recent amendments to its corporate law aimed at curbing opportunistic litigation.

3. Assess Voting Rights Reforms

2025 amendments to the Texas Business Organization Code gave Texas corporations more freedom to design voting rights for different classes or series of shares, including allowing voting as a single group and removing the requirement for separate class votes on major corporate actions. These under-the-radar reforms are important for companies to consider in their reincorporation decision-making. In enacting them, Texas has provided pre-public and public companies with a more flexible, streamlined capital framework, removing friction in pre-IPO structuring and promoting post-IPO transactional agility.

4. Explore Potential Cost Savings

Delaware imposes a relatively high franchise tax. But companies incorporated in Texas generally avoid that burden. Based on typical company profiles, small- or mid cap companies reincorporating in Texas from Delaware may potentially save around $250,000 per year on average, though outcomes vary depending on capital structure and share count. Companies that see franchise tax differences as a relevant factor, especially companies aiming to reduce recurring administrative costs, should consider these savings in light of the potential costs of reincorporating.

5. Consider Texas Ties

Some companies give strong consideration to Texas if they have substantial operational, financial, or managerial ties to the state. Exxon, for example, has been incorporated in New Jersey for more than a century. But in the company’s March 2026 re-domestication proposal, it observes that most senior corporate executives and all corporate functions have been based in Texas for the past 35 years. Familiarity alone won’t drive a move to Texas, nor is it a prerequisite for such a move, but it might tip the scales. Companies with deep Texas roots can capture legal alignment and stakeholder goodwill by matching legal domicile to operational reality.