In March 2025 Delaware completed its annual corporate updates to the Delaware General Corporation Law (“DGCL”) to provide certainty to key areas of Delaware corporate law (see HERE). The changes were expected to reduce the tide of redomestications to other states and reduce litigation risks for corporations and their boards of directors. However, the outflow of corporations has not reduced, rather the exit to other states, including Nevada and Texas, has only intensified, in what many are aptly referring to as DExit.
The agreed reasons for the DExit movement center around recent decisions by the Delaware Chancery Court, together with bolder corporate management (think Elon Musk) have had a significant impact on the topic. Seeing the opportunity, both Nevada and Texas have adopted management friendly amendments to their respective corporate statutes and both states have created dedicated Business Courts.
Moreover, Delaware is expensive all around. Both Nevada and Texas, for example, have significantly less expensive annual franchise taxes. Delaware has other less obvious costs as well. The DGCL prohibits officer/director indemnification for derivative suit settlement making side A D&O insurance particularly important – and expensive. By contrast, Nevada and Texas do not have the same prohibitions. Where companies are permitted/have an indemnification obligation for derivative settlements, and if directors are also subject to significantly more generous standards of liability, such as in Nevada, Side A D&O insurance should be easier and less expensive for insurers to write.
Nevada Updates
In May, 2025 Nevada adopted amendments to its Nevada Revised Statutes (NRS) seemingly responding to many of the complaints lodged against the DGCL. One of the most notable changes is an amendment to Section 78.046 specifically allowing articles of incorporation to contain provisions waiving a jury trial and specifically allowing a matter to be tried by a judge (presumably in the brand new Nevada business court).
Also notably, the Nevada amendments further insulate directors, officers and controlling shareholders from liability by defining fiduciary duties and providing for a “cleansing procedure” for transactions.
Section 78.240 has been amended to clarify that no stockholder, even a controlling stockholder, owes any fiduciary duty to the corporation or any other stockholder merely because of their position as a stockholder. The only fiduciary duty owed by a controlling stockholder is to refrain from exerting undue influence over a director or officer with the purpose and proximate effect of inducing a breach of fiduciary duty by said director or officer that (a) results in liability under NRS 78.138 and (b) involves a contract or transaction where the controlling stockholder has a material and nonspeculative financial interest and results in a material, nonspeculative and nonratable financial benefit to the controlling stockholder.
The changes allow for disinterested directors to approve a transaction with a controlling stockholder, granting a presumption that there was no breach of fiduciary duty. That is, a controlling stockholder is presumed to have not breached this fiduciary duty if such transaction has been authorized and approved by: (i) a committee of the board of directors consisting of only disinterested directors; or (ii) the board of directors in reliance on the recommendation of a committee of the board consisting of disinterested directors.
The amendments add a definition of “controlling stockholder” to mean a stockholder having the voting power to elect at least a majority of the corporation’s board of directors.
The legislation also gives controlling stockholders protection similar to the Nevada business judgment rule for officers and directors. It notes that Nevada aims to “maintain Nevada’s competitive advantage as a leader in stable, predictable and common-sense corporate law.” Clearly watching the Delaware Chancery Court opinions, the amendments also seemingly address a recent angst inducing Delaware opinion by clarifying that Nevada directors do not need to approve “final” merger documents and allowing them to use their business judgment to decide when the documents are sufficiently “substantially final” for board approval.
Delaware’s Response
As mentioned, in March, 2025, Delaware adopted amendments to the DGCL, in part to combat DExit. One of those amendments was to Section 144 to establish safe harbors to shield officers, directors and significant shareholders from liability as a result of related party transactions. Amended Section 144 allows a related party transaction to be approved by a special committee of directors to qualify for the safe harbor no matter when that committee was formed. Delaware case law previously required such a committee to be established ab initio, before any economic terms of the proposed transaction were discussed. The new safe harbor also departs from the requirement that the special committee must be comprised entirely of disinterested directors.
The statute also creates a rebuttable presumption that a director of a public company is disinterested if the board determines that the director satisfies applicable stock exchange standards. In order to rebut this presumption, the plaintiff must show “substantial and particularized facts” indicating that the director was conflicted. Further, the statute precludes a stockholder owning less than one-third of the voting power of the company from being regarded as a controlling stockholder.
Although Delaware had hoped amended Section 144 would slow the DExit conversation by reducing litigation risks for officers/directors/controlling shareholders, it hasn’t had that big an impact. In fact, it was after the amendments that Delaware was given one of its biggest blows. In July, 2025, Andreeson Horowitz, silicon valley’s largest venture capital firm, announced it was leaving Delaware and urged others to follow suit. In a statement on the DExit, Andreeson asserted:
It used to be a no-brainer: start a company, incorporate in Delaware. That is no longer the case due to recent actions by the Court of Chancery, which have injected an unprecedented level of subjectivity into judicial decisions, undermining the court’s reputation for unbiased expertise. This has introduced legal uncertainty into what was widely considered the gold standard of U.S. corporate law. In contrast, Nevada has taken significant steps in establishing a technical, non-ideological forum for resolving business disputes. We have therefore decided to move the state of incorporation of our primary business, AH Capital Management, from Delaware to Nevada, which has historically been a business friendly state with fair and balanced regulatory policies.
We could have made this move quietly, but we think it’s important for our stakeholders, and for the broader tech and VC communities, to understand why we’ve reached this decision. For founders considering a similar move, there is often a reluctance to leave Delaware, based in part on concerns for how investors will react. As the largest VC firm in the country, we hope that our decision signals to our portfolio companies, as well as to prospective portfolio companies, that such concerns may be overblown. While we will continue to fund companies incorporated in Delaware, we believe Nevada is a viable alternative and may make sense for many founders.
The Author
Laura Anthony, Esq.
Founding Partner
Anthony, Linder & Cacomanolis
A Corporate and Securities Law Firm
Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony, Linder & Cacomanolis, PLLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALC legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
Ms. Anthony is a member of various professional organizations including the Crowdfunding Professional Association (CfPA), Palm Beach County Bar Association, the Florida Bar Association, the American Bar Association and the ABA committees on Federal Securities Regulations and Private Equity and Venture Capital. She is a supporter of several community charities including the American Red Cross for Palm Beach and Martin Counties, Susan Komen Foundation, Opportunity, Inc., New Hope Charities, the Society of the Four Arts, the Norton Museum of Art, Palm Beach County Zoo Society, the Kravis Center for the Performing Arts and several others.
Ms. Anthony is an honors graduate from Florida State University College of Law and has been practicing law since 1993.
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