Texas, Nevada Laws Can’t Be Measured Against Delaware Benchmark

Recent arguments over Nevada corporate law expose a deeper problem in corporate law scholarship that is now shaping how Texas is being evaluated as a corporate jurisdiction. Corporate law, which has for decades been taught and studied with Delaware as the default framework, has treated other jurisdictions largely as variations on that model.

That framing is convenient, but it is also wrong. When Delaware is treated as the default, jurisdictional competition becomes a debate about perception rather than substance.

A group of Nevada officials, practitioners, and academics late last month publicly responded to a draft academic article about their state’s corporate law. They were joined by Nevada Gov. Joe Lombardo (R), Nevada Secretary of State Francisco Aguilar, and more than 20 lawyers and faculty.

Their core claim is straightforward: Widely circulated critiques of Nevada corporate law are based on incomplete analysis, selective use of authority, and in some instances, unsupported quotations. They’re not trying to declare Nevada “better” than Delaware; they’re insisting that investors, advisers, and corporate leaders make decisions based on an accurate account of the law.

Most US jurisdictions—36 states—draw heavily from the Model Business Corporation Act, or MBCA. Texas and Nevada sit within that broader ecosystem, but in different ways. Texas once adopted significant portions of the act before diverging through recodification and subsequent statutory reforms.

Nevada never formally adopted the MBCA, but its corporate statute reflects selective borrowing and influence from that model framework. By contrast, Delaware developed along a distinct, judge-driven path.

That baseline matters because many of the features now described as “alarming” in Texas or Nevada aren’t innovative. Derivative suit barriers, inspection limits, exculpation provisions, and judicial deference to boards are standard features of MBCA-influenced systems. The difference is often architectural—default versus opt-in—rather than conceptual. What is being framed as deviation is often just unfamiliarity.

The Nevada response illustrates the point. It acknowledges meaningful differences between Nevada and Delaware—particularly around litigation exposure and director liability. But it rejects the claim that those differences amount to a “liability-free” regime or a breakdown in corporate accountability.

More importantly, it shows how those conclusions were reached: by omitting contrary cases, mischaracterizing doctrine, and treating Delaware as the implicit benchmark for what corporate law should look like. That methodology doesn’t just distort Nevada. It distorts the market.

Texas is now encountering the same dynamic. Recent commentary on Texas corporate law—particularly after statutory reforms and high-profile reincorporations—has emphasized increased board discretion, limits on shareholder litigation, and expanded contractual flexibility. Those observations aren’t wrong, but the framing often implies that Texas is uniquely departing from accepted corporate law norms.

But Texas is operating within the same MBCA-influenced ecosystem as most states—one that prioritizes predictability, statutory clarity, and contractual ordering. That approach differs from Delaware’s equity-driven model, which relies more heavily on judicial refinement through litigation.

Difference isn’t dysfunction, though. Many of the protections that critics view as distinctive in Texas or Nevada—particularly limits on director liability—are functionally available in other jurisdictions through exculpation provisions that corporations routinely adopt. The distinction is often one of form: statutory default versus private ordering.

That distinction matters for lawyers drafting governance documents and shouldn’t be mistaken for a structural failure of corporate law. The deeper issue is how corporate law gets made—and how little attention that process receives outside Delaware.

The MBCA is developed by the American Bar Association’s Committee on Corporate Laws through an iterative process involving practitioners, academics, and policymakers. It reflects a national consensus about corporate governance, not a single state’s competitive strategy.

When Texas or Nevada adopts or adapts MBCA provisions, they are participating in that broader framework. Treating those choices as aberrational misunderstands both their origin and their prevalence—and creates risk.

Institutional investors, proxy advisers, and boards rely on external analysis and research to assess governance environments. When legal scholarship selectively engages with authority or applies inconsistent standards across jurisdictions, it doesn’t just shape academic debate. It influences real capital allocation decisions.

The Nevada response is explicit on this point: Misperceptions about corporate law can lead market participants to rely on incomplete or inaccurate information when evaluating incorporation choices.

The emerging narrative now casts Texas as a management-friendly haven that weakens shareholder oversight. But like Nevada—and like other MBCA jurisdictions—Texas retains fiduciary duties and enforces statutory standards, while permitting liability where plaintiffs can overcome the business judgment presumption and establish bad faith, loyalty breaches, or knowing misconduct. The bar may be higher to overcome the presumption, but it isn’t nonexistent.

Companies choose jurisdictions based on litigation risk, regulatory exposure, operational footprint, and governance preferences. Investors respond accordingly. But that system only works if the underlying information is reliable.

Corporate law doesn’t belong to Delaware; it is a distributed system shaped across dozens of jurisdictions. Understanding that system requires more than fluency in Delaware doctrine. It necessitates engagement with the legal architecture that governs the majority of US corporations.

The Nevada response is a reminder of what happens when that engagement is missing, and Texas shouldn’t have to issue its own correction for the same lesson to take hold.

Columnist Carliss Chatman is a professor at SMU Dedman School of Law. She writes on corporate governance, contract law, race, and economic justice for Bloomberg Law’s Good Counsel column.

Read More Good Counsel