Bell Nunnally partners R. Heath Cheek and Andrew Dowdy with Senior Associate Nathan Cox authored the Texas Lawyer article “DExit – How and Why Companies Are Choosing Texas as Their New Corporate Home.” The piece explores considerations for companies looking to reincorporate in Texas, as the state battles Delaware – the dominant jurisdiction for incorporation. The nascent push for reincorporations comes against a backdrop of aggressive, pro-business moves by Texas and its legislature to make the state more business friendly.
The authors write:
In the last two years alone, Texas has enacted a wave of legislation creating incentives for businesses to relocate their headquarters and place of incorporation to the state…. [T]he Texas Legislature has actively passed legislation positioning the state as a premier destination for companies seeking to establish or relocate their headquarters or place of incorporation. Recent laws include:
- The creation of a specialized court system (the business courts) designed to rival the Delaware Court of Chancery
- Statutory protections for companies incorporated in Texas
- Various financial incentives to facilitate corporate relocation and expansion
On the incorporation issue, Cheek, Dowdy and Cox detail:
In 2025, Texas has focused on making the state more incorporation-friendly to encourage companies to reincorporate in Texas, in particular, from Delaware (referred to as the “DExit” movement). Senate Bill 29, passed in May, introduced comprehensive amendments to the Texas Business Organizations Code aimed at reducing litigation risk and increasing corporate governance flexibility.
The authors then offer a rundown of the benefits and potential pitfalls for a business reincorporating in Texas, including:
Benefit: Texas is a much lower-tax state than many states and, in particular, the current incorporation king, Delaware…. The lack of state income taxes on individuals and corporations and the lower franchise tax with a high “no tax due” threshold make Texas far superior to Delaware from a tax standpoint.
Pitfall: [T]he most common types of pitfalls would be covenants in contracts. It’s common that certain types of contracts contain covenants requiring consent before a company can make certain structural changes, including reincorporation.
Cheek, Dowdy and Cox close by commenting:
The original rationales for businesses, in particular Texas-based companies, to be incorporated in a different state like Delaware are diminishing or entirely gone. It’s time to ride the wave of companies moving their place of incorporation to Texas.