While Elon Musk moved two of his companies (Neuralink and X Corp.) to Nevada, he notably reincorporated Tesla in Texas. Mr. Musk's decision embrace of Texas raises the question of whether other Delaware corporations will follow Mr. Musk's lead. SMU Dedman School of Law Professor Christine Hurt tackles this question in a forthcoming article. She concludes:
Texas, while historically not a hub for corporate incorporations, has emerged as a potential alternative due to its business-friendly environment and the recent establishment of specialized business courts. However, Texas lacks the robust body of corporate case law that Delaware offers. The move by Tesla and the broader conversation around Texas corporate law suggest an emerging shift where businesses may seek to shape corporate governance frameworks more favorable to managerial control, potentially establishing a new "controller primacy" model. Legislative developments in early 2025 in both Texas and Delaware signal an ongoing competition between the two states to attract corporate incorporations, raising questions about whether they are racing to the top or the bottom in corporate governance.
Texas, Delaware, and the New Controller Primacy (forthcoming).
On March 24, Professor Hurt, University of Idaho School of Law Professor Wendy Couture and I will be participating at a symposium at the University of Maryland School of Law. The symposium is organized by the school's Journal of Business & Technology Law.
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