Texas Business Courts – A New Reason for Corporations to Choose Texas

Heath Cheek and Nathan Cox

The term “DExit” came into the popular lexicon beginning in early 2024 after Elon Musk publicly criticized the Delaware Court of Chancery’s ruling in his landmark Tesla compensation package case. In that case, Delaware struck down a heavily incentivized pay package in a ruling many criticized for being unfriendly to business interests.

The exodus of 52 public companies from Delaware revealed untapped demand for a jurisdiction combining Delaware’s legal infrastructure with Texas’ competitive advantages. Texas was and continues to be uniquely positioned to seize this market opportunity, and many of these public companies have found a home in Texas. The groundwork for Texas’ receipt of those transfers was solidified in 2023, when the Texas Legislature codified several business-friendly reforms, including lowering filing fees, instituting property tax abatement programs and, most notably, establishing the landmark Texas Business Courts.

Texas has been a popular choice for corporate relocations in recent decades due to its workforce, access to capital, lack of state income tax and business-friendly regulations. While these corporate relocations moved operations and employees to Texas, most companies still maintained Delaware as their state of incorporation.

The primary reason companies continued to choose Delaware was predictability. Delaware’s Court of Chancery had a well-earned reputation for providing clear and predictable business rulings with judges specializing in corporate law and aided by a large body of corporate precedents to guide their decisions. As a result, Delaware presently has more than 2.2 million entities registered to do business in the state (more than double the number of people in the state), with 68% of the Fortune 500 headquartered there, and 60-70% of all IPOs originating from the state. Delaware’s franchise tax generates $2.2 billion per year, which is almost one-third of the state’s entire budget.[1]

In 2023, the Texas Legislature began its push to attract businesses to reincorporate in Texas by introducing several initiatives. However, its headline-capturing move was the launch of the Texas Business Courts as a statewide competitor to the Delaware Court of Chancery. Early results show that the Texas Business Courts have streamlined procedures and are squarely focused on complex business disputes. It provides law clerks to assist judges, and requires courts to publish written opinions, creating a body of precedent to provide predictability when making business decisions and in future court rulings. The Texas Legislature also established a new dedicated court of appeals, the Fifteenth Court of Appeals, with statewide jurisdiction to handle all appeals arising from the Texas Business Courts.

The Texas Business Courts are courts of limited jurisdiction. Their jurisdiction includes disputes over corporate control, interpretation of corporate bylaws, large transactions (over $5 million in controversy), breach of fiduciary duty, trade secrets, intellectual property, securities and trade regulation actions, violations of the Texas Business Organizations Code and other business matters. Their jurisdiction excludes consumer cases, personal injury and medical or legal malpractice. The end goal is to provide Texas-domiciled businesses with predictability over the management of their corporate affairs and major contracts and projects.

The Texas Legislature has initially restricted the Texas Business Courts to the major metropolitan areas (Dallas, Fort Worth, Houston, Austin and San Antonio), leaving major areas of the state uncovered for now.

The Texas Business Courts are the largest change to the Texas court system in a generation. Previously, business cases were handled by general jurisdiction courts throughout the state. As a result, a corporate law case could be decided by a judge whose specialty may have been family law, criminal law, probate law or personal injury. Additionally, the large business cases took up a considerable portion of the courts’ judicial resources. In transferring these matters to the Texas Business Courts, district courts can redirect resources to other cases and address substantial backlogs, while business cases receive specialized attention.

In the two years the Texas Business Courts have been open for filing, litigants have filed 525 cases and courts have issued more than 120 published opinions, as well as numerous written, but unpublished, opinions.[2] Feedback from corporate lawyers has been excellent, offering praise for the focused nature of the courts, their ease of use and the speed of business litigation.

Texas Business Courts have created a statewide system over the past two years worthy of comparison to the Delaware Courts of Chancery and provide businesses with the predictability they desire. By establishing the Texas Business Courts, the Texas Legislature removed a major hurdle to shifting corporate incorporation from Delaware to Texas.

Companies have noticed and responded in kind. Texas’s business filings in 2025 and 2026 are up almost 20% from totals to the opening of the Texas Business Courts.[3] In addition, at least 30 major companies have reincorporated in Texas during that same time frame, including SpaceX, Tesla, Coinbase, Dell, Dillard’s and ExxonMobil, with more likely to follow.

The Texas Legislature is not done with the Texas Business Courts either. Expect the next legislative session to look at broadening the courts’ jurisdiction to include more corporate disputes and to add additional territories of the state.

[1] See https://corp.delaware.gov/stats/

[2] See https://www.txcourts.gov/businesscourt/opinions/

[3] See https://gov.texas.gov/news/post/governor-abbott-announces-expedited-online-business-filings-in-texas