Bell Nunnally Partner R. Heath Cheek is quoted in the Law360 article “Dillard’s Considering Texas Incorporation Amid ‘DExit’ Trend.” The piece explores the nascent development of companies incorporating or reincorporating in Texas, against the backdrop of consistent business growth and propelled by a decided push by the Texas Legislature to enact “business friendly” reforms, including the creation of the Texas Business Courts.
Cheek notes in the article that Delaware’s status as the leading state for incorporation is vital for that state as it collects billions of dollars in franchise taxes and corporate income taxes each year from incorporated companies, even if they do no business there.
The reporter goes on:
Cheek told Law360 Pulse that he has only anecdotal evidence from talking with other lawyers and general counsel, but he is hearing that hundreds of smaller companies are moving their incorporation to Texas, especially portfolio companies held by private equity groups.
He expects the Texas secretary of state to release specific numbers around the end of the year.
After adding a passage speaking to the importance of recent legislative and judicial developments in terms of making Texas more attractive relative to Delaware, the author adds further commentary from Cheek:
Cheek agreed, saying that in the last two years Texas has enacted a wave of legislation in hopes of luring more companies to relocate their headquarters or their incorporation to the state.
For one, it has created the Texas Business Court to supplant Delaware’s Chancery Court. In May, it also introduced a number of other business code amendments that would reduce litigation risk and “increase corporate governance flexibility,” Cheek said in a recent article he co-authored.
Cheek’s commentary to Law360 on Texas’ move to attract corporate incorporation and reincorporation follows a pair of byline articles he recently co-authored on the topic.
To read the full Law360 article, please click here.