In order to try to stem the supposed tide of Delaware corporations reincorporating in other states (particularly Texas and Nevada), Delaware recently enacted a set of revisions to its corporate law. Whether or not the legislative changes are sufficient to reduce the number of so-called “DExits” remains to be seen. But the other states are not just standing by idly waiting to see what happens. They have been at work in their own corporate law laboratories. As discussed below, the legislatures of both Texas and Nevada have in recent days both passed significant revisions to their respective corporate laws. The changes not only represent significant shifts in the corporate law arena, but also could entail significant changes in the corporate litigation world, as well.

Texas

Texas’s legislature has been hard at work trying to make it a more attractive destination for companies to incorporate. Indeed, Texas has made a sufficient number of changes that it has gained a reputation, at least in some circles, for its statutory innovation.

The most important part of Texas’s recent statutory changes in the corporate law arena is Senate Bill No. 29, which the Texas legislature adopted on May 7, 2025. As discussed in a May 21, 2025, memo from the Fenwick and West law firm on the Harvard Law School Forum on Corporate Governance entitled “Texas Corporate Law Changes Challenge Delaware’s Dominance” (here), S.B. 29 provides for “significant amendments to the Texas Business Organizations Code (TBOC).” Texas Governor Greg Abbott signed the bill into law on May 14, 2025. The legislation is titled “Texas: Open for Business.”

The Texas legislation introduces a number of significant changes to the TBOC, all intended, as the law firm memo’s authors put it, “to make Texas the preferred state for incorporation.”

Among other things, S.B. 29 codifies the business judgment rule and the specific requirements for rebutting the business judgment rule presumption; allows corporations to impose a minimum beneficial ownership requirement on shareholders who are trying to bring a derivative action on behalf of a corporation; allows corporations to waive jury  trials  in their governance documents; and restricts the materials that may be obtained through a books and records request (specifically providing that e-mails and other electronic communications are not considered “records” for purposes of a books and records request).

In addition to S.B. 29, the Texas legislature also passed S.B. 1057, which allows any “nationally listed corporation” based in Texas, under specified circumstances, to incorporate a provision in their governing documents that would impose stock ownership requirements on shareholders seeking to submit proposals to the corporation. Texas Governor Abbott signed this bill into law on May 19, 2025.

Nevada

The Nevada legislature, aware of developments in its sister states’ legislatures, has meanwhile produced some revisions of its own to its corporations code. As UNLV Law Professor Benjamin Edwards details in a post on the Business Law Prof Blog (here), on May 22, 2025, the Nevada legislature adopted several revisions to the state’s corporations code.

Among other things, the statutory revisions enable Nevada corporations to adopt charter provisions waiving jury trials for stockholder lawsuits and introduces statutory revisions defining the fiduciary duties owed by controlling stockholders, as well as limiting their liability. The controlling shareholder provisions specify that 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 the director or officer in connection with a contract or transaction in which the controlling stockholder has a material financial interest.

The legislation also allows for disinterested directors to approve a transaction with a controlling stockholder, which would provide a presumption that there was no breach of fiduciary duty. The legislation also gives controlling stockholders protection similar to the Nevada business judgment rule for officers and directors.

Professor Edwards notes that in adopting the legislation, Nevada aims to “maintain Nevada’s competitive advantage as a leader in stable, predictable and common-sense corporate law.”

Discussion

If nothing else, it is clear that as far as the legislatures of Delaware, Texas, and Nevada are concerned, it is game on when it come so competing to become companies’ preferred state of incorporation. Indeed, it seems that the legislatures are far from done. Among other things, the law firm memo to which I linked above about the Texas legislation notes that there are already a number of other additional proposed legislative changes in the works.

One over-arching question behind all of this is whether the other states’ changes are sufficient to overcome the perceived advantage that Delaware continues to have in the incorporation race. Delaware undoubtedly continues to be the presumptive jurisdiction of choice due to its well-developed case law, respected judiciary, and perceived user-friendly corporate infrastructure. While Texas and Nevada do indeed get points for innovation, they are also still relatively unknown quantities. The reputations they eventually will have are yet to be established.

There are other factors at play here that could drive corporate decision-making, beyond what the states’ respective legislatures may do. For example, as Professor Edwards points out in a separate May 16, 2025, post on the Business Law Prof Blog (here), whatever advantages Texas may be able to muster in the state competition, it also may be perceived as less attractive by at least some companies due to potential exposure to intellectual property litigation in Texas. As Professor Edwards notes, law firms have long warned companies about the risks of Texas exposure because of intellectual property litigation risks. Incorporating in Texas, Professor Edwards notes, caries a unique risk because it makes venue proper in Texas for intellectual property litigation.

The state competition for incorporations undoubtedly will continue and it seems likely that we can anticipate that the states’ respective legislatures will continue to innovate. Along the way, the landscape for corporate litigation is also changing, in ways that undoubtedly are defendant friendly. Codifying and clarifying the business judgment rule, restricting the availability of derivative litigation to shareholders with certain minimum interests, introducing procedures to cleanse conflicted controller transactions, restricting the scope of material available for books and records requests, all of these things not only make corporate litigation relatively less attractive to plaintiffs but may even make the litigation less likely.

To be sure, not all of these changes have been adopted in each of the three competing states. But the states clearly are watching each other, collectively moving toward a set of new standards that clearly could mean that corporate litigation in general is going to be different going forward.

Of course it remains to be seen exactly what all this will mean, in terms both of the numbers and kinds of cases that get filed, and what success the cases that are filed will have on the merits. In terms that matter to D&O insurers, it will be some time before the effects of these changes can be quantified – and until they can be quantified, it is relatively unlikely that the legislative changes alone will translate into D&O insurer pricing and risk selection decisions. But while it may be some time before the changes can be quantified, we can already at least say that the landscape of corporate litigation is changing, relatively rapidly, in ways that seem likely to matter.