ANALYSIS: DExit Pits Chancery Against Controlling Stockholders

The phenomenon known as “DExit"—the exodus from Delaware of several large companies with controlling stockholders including Elon Musk’s Tesla Inc.—is threatening to upend the status quo for corporate law. DExit has created a disconnect between the country’s premier and historically corporate-friendly business court, and companies seeking reincorporation in states that appear more receptive to empowering and protecting controlling stockholders’ interests.

Delaware’s Court of Chancery, which has long been synonymous with an influential body of corporate governance law, is now facing competition from business courts in states offering greater protections for management and controllers at the expense of shareholder interests. ...