Delaware is trying to make nice again with corporations after Elon Musk's exit
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- Delaware has long been a corporate haven due to its business-friendly laws.
- Elon Musk's decision to reincorporate both Tesla and SpaceX outside Delaware has made waves.
- State lawmakers are trying to maintain Delaware as a top destination for business incorporation.
For generations, Delaware has been a top destination for business incorporation, giving the First State an outsized level of influence relative to its small population of just over one million people.
However, the state is now working fervently to preserve its business-friendly reputation after Elon Musk moved the corporate home of both Tesla and SpaceX from Delaware to Texas last year.
Musk made the decision after a Delaware judge struck down a $55 billion compensation package for Musk. Several other high-profile businesses followed his lead.
Delaware lawmakers are now taking up a bill that seeks to maintain the state as a premier location for businesses by altering its corporate law structure. The bill, which was passed unanimously by the state Senate on Thursday, would change how deals between corporate leaders and major shareholders are handled in Delaware.
The Delaware House of Representatives will take up the bill next, and should it pass the lower chamber, it will head to Democratic Gov. Matt Meyer, who supports the measure. Meyer spoke to Business Insider in February about threats to the state's corporate brand.
"The fact is, Delaware is the best location in the world for a company to incorporate, and that's thanks to our legal expertise dating back to 1792. But let's be clear: If any entity leaves Delaware, we're going to work to win them back," the governor, who took office in January, told BI.
Democratic state Senate Majority Leader Bryan Townsend, the bill's primary sponsor, told Delaware Public Media that the changes are not intended to sway Musk to return but to ensure that companies considering leaving the state do not.
"We don't want there to be no guardrails — that's what other states might be offering," Townsend said. "We want important guardrails, but they've got to be predictable and consistent and workable out there in terms of all the kinds of transactions that companies enter into."
While the bill wouldn't be retroactive, meaning it wouldn't affect the proceedings involving Musk, the Tesla CEO's ongoing situation could have major implications for Delaware's business climate moving forward.
In January 2024, Musk took to X to criticize the state after Chancery Court Judge Kathaleen McCormick blocked his compensation package.
"Never incorporate your company in the state of Delaware," Musk wrote on the social media platform at the time. In December 2024, McCormick once again blocked the package. Musk is appealing the decision.
Pershing Square Capital Management founder Bill Ackman announced in February that he would also move his management company from Delaware to reincorporate in Nevada. Dropbox also recently reincorporated from Delaware to Nevada, effective this month.
Meta, too, is considering leaving Delaware for Texas or another state, according to the Wall Street Journal.