Delaware’s Grip on Corporate Dominance Is Loosening

Delaware’s Grip on Corporate Dominance Is Loosening: What Business Owners Need to Know

For decades, Delaware has been the undisputed home of American corporate law. Roughly two-thirds of the Fortune 500 are incorporated there, and countless startups have followed suit. I began my legal career practicing in Delaware, and I’ve seen firsthand why: 1) the Delaware Court of Chancery has long been considered the premier state business court in the country because the judges in Chancery (called the “chancellor” and “vice-chancellors”) are experts in corporate law, the court’s precedents are widely respected, and its decisions bring a level of predictability that business leaders crave, and

(2) the Delaware legislature is active and responsive. Delaware is a small state, many of the legislators literally grew up together, and it has largely been effective in ways legislatures should be.

But today, Delaware’s dominance is facing real challenges.

Rulings out of the Court of Chancery over the past two years have raised alarms for majority owners and corporate boards. In a handful of high-profile cases, the court sided with minority shareholders in ways that placed significant restrictions and liabilities on majority owners. While protecting minority rights is an important part of corporate governance, these decisions created uncertainty for the very people who typically set up Delaware entities in the first place - founders, investors, and boards who expect clarity and stability in running their businesses.

For many entrepreneurs and investors, the message was unsettling: Delaware may not always provide the protection and stability they had counted on. With that said, and to Delaware’s credit, its legislature moved almost immediately to address the concerns. Corporate franchise taxes and annual report fees make up a significant portion of the state’s revenue, so protecting the state’s reputation as the gold standard of incorporation is a matter of fiscal survival.

Delaware passed SB 21 in March 2025, a sweeping amendment to the state’s corporate code that creates a statutory safe harbor for conflicted transactions involving controlling shareholders and narrows shareholder access to company records - reforms designed to restore Delaware’s pro-management reputation, but already drawing criticism and possible legal challenges.

This responsiveness has always been part of Delaware’s appeal. Still, the episode raised a question that many businesses hadn’t considered in decades: if Delaware isn’t the automatic choice, where else should we look? That question has not gone unnoticed by other states. Nevada, Texas, and Oklahoma are actively promoting themselves as alternatives, and they are tailoring their laws to lure companies away from Delaware.

• Nevada has long marketed itself as a business-friendly state with strong liability protections and minimal disclosure requirements. Its statutes emphasize management authority and limit shareholder litigation.

• Texas is leveraging its booming economy and business-friendly reputation to position itself as a viable incorporation hub, particularly for companies already headquartered there.

• Oklahoma recently passed legislation aimed at making its corporate statutes more attractive to high-growth businesses.

The competition is real, and the timing is strategic: companies are paying closer attention to incorporation choices than they have in years.

In July 2025, Andreessen Horowitz (a16z) took a bold step: it moved its parent entity, AH Capital Management, LLC, from Delaware to Nevada. In a widely circulated blog post, the firm urged founders - and even other investors - to rethink Delaware as the automatic choice. Nevada, it argued, offers stronger statutory protections, including a codified business judgment rule and limited shareholder inspection rights, which can reduce judicial subjectivity. Given a16z’s influence in venture capital, its decision has already elevated Nevada in the conversation about viable Delaware alternatives.

So, what should entrepreneurs, executives, and investors take away from this?

1. Delaware is still the incumbent go-to jurisdiction - but not untouchable. The state’s legislature remains committed to maintaining its dominance, and new laws like SB 21 are proof of how quickly it will act to preserve its position. If stability and predictability are your top priorities, Delaware remains a safe choice.

2. Alternatives are now viable. Nevada, Texas, Oklahoma, and others are serious about attracting businesses. For some companies - especially those based in those states or seeking lower costs and more management-friendly statutes - incorporating outside of Delaware may make strategic sense.

3. One size no longer fits all. The “default to Delaware” mindset may be eroding. Business owners should now carefully weigh their industry, investor base, governance preferences, and long-term goals before deciding where to incorporate.

We are witnessing a pivotal moment in American corporate law. For the first time in a long time, Delaware faces real competition. While I expect Delaware to remain the leader in the near term, business owners should recognize that the landscape is shifting. Incorporation is not just a formality - it sets the legal framework for governance, shareholder rights, and dispute resolution for the life of your company. Will other investors be as comfortable with non-Delaware corporations as a16z appears to be? Or is the historical dominance of Delaware enough to help the state weather this current storm of incorporation competition?

At Fourscore Business Law, we help clients think strategically about these issues from the start. Whether you are a founder forming your first entity or an established company reconsidering your corporate structure, now is the time to take a fresh look at where and how you incorporate.

Delaware’s reputation was built over decades, but reputations can change quickly. With other states innovating, with major players like a16z signaling a shift, and with SB 21 already stirring debate, business leaders have more options - and more responsibility to choose wisely - than ever before.

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