When Dell Technologies announced its board of directors recommended a change of the company’s incorporation from Delaware to Texas this month, state officials were quick to celebrate.

“This is what happens when job creators and innovators are welcomed, not punished,” Gov. Greg Abbott wrote in a statement. “More businesses are sure to follow.”

Readers may be forgiven for thinking Dell was already located in Texas, given the existence of its headquarters in Round Rock for decades and founding more than 40 years ago on the University of Texas at Austin campus.

Abbott was celebrating the company’s decision to move its legal home rather than its physical home, from Delaware, the legal home to nearly 70% of all Fortune 500 companies, to Texas. Dell’s reincorporation here will mean it will be subject to Texas’ legal and tax regulations, so that shareholder lawsuits against the company, regardless of where they originate, would have to play out in more business-friendly Texas.

Dell’s announcement to reincorporate from Delaware, where its legal home has been since 1988, follows a similar decision in March by the ExxonMobil board of directors to recommend reincorporating the Spring-headquartered oil and gas company to Texas, from New Jersey. Tesla, Space X and Coinbase are among major U.S. companies to redomicile in Texas in recent years.

“I think we're going to see more,” said state Sen. Bryan Hughes, R-Mineola and an architect of several recent changes to state law aimed at attracting more corporations to the state. “Delaware has been the default state of incorporation for decades. So it's not going to change next week, but it's changing.”

Despite the fanfare over each announcement, Dell and Exxon’s reincorporations will change little for the state, said Ann Lipton, a law professor at University of Colorado Boulder who studies corporate governance.

The companies’ robust physical presence in Texas means any investment and jobs the companies have already been here for years and their reincorporations wouldn’t add many more. Both companies also already pay franchise taxes to the state because of their physical presence here, and the legal filing fees collected by the state for the companies doing business here represent little to the state budget, Lipton added.

“I don't know that there’s going to be obvious, clear financial benefits, the way Delaware has,” Lipton said.

The strength of the Texas economy puts Texas in a strong position to capitalize on corporate discontent in Delaware, and these reincorporations could have knock-on effects throughout the state economy, Hughes said.

When a company moves its legal home to a state, that brings their legal and financial operations under that state’s umbrella. While an incorporation may not necessarily bring a new warehouse or factory, it could create more jobs or more clients for those white collar sectors — such as attorneys, accountants and financial analysts for those companies — and further emphasizes Texas as a good place to do business, Hughes said.

“What you see is Texas becoming the financial services capital of the country. I know that sometimes that sounds like puffing, you know, we're Texans, we brag,” Hughes said. “But objectively, Texas is going to pass New York as the financial services capital. So whenever we bring jobs like that to Texas, that grows the economy, it generates other jobs.”

Last year’s creation of the Texas Stock Exchange, along with announcements that the New York Stock Exchange and NASDAQ would open their own locations in the state, is proof of Texas’ rising status as a hub for corporations, Hughes said.

Delaware for decades has been the preferred location of incorporation for companies due to its longstanding expertise and efficiency with corporate filings, business-friendly legal framework and its Court of Chancery that specializes in corporate disputes.

Texas and other states’ efforts to lure corporations from Delaware began in the past several years after the Court of Chancery came under criticism for rulings considered unfriendly to corporate management. A 2024 decision voided a $56 billion pay package for Elon Musk, despite shareholders approving the deal. Musk responded by moving Tesla and his other companies to Texas.

While New Jersey does not hold the same importance as Delaware in the world of incorporations, Exxon had called the state its legal home since the 1800s before the state sued the company in 2022, arguing it contributed to climate change and should help contribute to natural disaster recovery.

Amid growing corporate discontent in the north, Hughes and other Texas legislators created Texas’ business courts during the 2023 session. Much like Delaware’s Court of Chancery, Texas’ new courts do not have juries, instead relying on judges specialized in corporate law to hear and rule on cases.

“If the rules are predictable and people know what to expect, they'll risk their capital, they'll invest their money, they'll build factories and employ people,” Hughes said.

The Legislature made further changes to the business courts in 2025, and updated its statutes governing corporations to be more business friendly. This included allowing companies to adopt a threshold where shareholders can only sue a company if they own 3% of the company, making it harder for shareholders to sue.

Shareholders also must be able to show fraud, intentional misconduct or known violation of the law to be able to sue, a legal bar that is difficult to clear, Lipton said.

States like Nevada and Georgia have also worked to update their own state laws to attract corporations disaffected with Delaware, creating a national competition to lure companies away.

Legislators should not expect Delaware to stand by while Texas and other states encroach on their incorporation monopoly, said Lawrence Hamermesh, an emeritus professor at Widener University’s Delaware Law School.

“Delaware has devoted a lot of time and effort to this, because per capita, it's way more important to Delaware than it is to Texas,” Hamermesh said.

Taxes and legal filing fees from companies incorporated in Delaware, a state of 1 million people, make up 20% to 25% of its entire state budget, Hamermesh said. The massive number of large companies incorporated there also supports a robust legal and financial industry in Delaware, Hamermesh said.

Delaware’s General Assembly also meets annually and is known for reacting quickly to pass laws in response to corporate needs, Lipton said.

“Texas is a big state,” she said. “They’ve got other things to do in a Legislature that only meets every two years. That's a problem when you need to update the code.”

Regardless, the rising competition for incorporations puts Delaware in a bind, Lipton said.

In particular, Texas’ law that raised the threshold for shareholders to sue companies is difficult for Delaware to respond to because of the importance of its corporate legal workforce. If it raises the bar too high, the number of cases moving through Delaware courts could dry up, leaving attorneys and other legal professionals out of work, Lipton said. If more states follow suit, it could create a national environment where it’s very difficult for shareholders to sue their companies, Lipton added.

Lipton noted recent criticism of eXp Realty’s reincorporation from Delaware to Texas over fears that the Washington-based real estate firm may be using Texas’ higher bar for shareholder lawsuits to shield itself from a recent lawsuit related to sexual assault allegations. The Court of Chancery in Delaware allowed the lawsuit to proceed as shareholders argue that the company’s officers breached their fiduciary responsibility, just weeks before the company’s board announced the legal move.

The company has said publicly that the proposed reincorporation has nothing to do with the lawsuit and did not respond to a request for comment Tuesday.

Hughes said he and other legislators understand the need to balance both shareholder rights and corporate interests and would be keeping a close eye on how recent changes play out in practice.

“We are not looking to create a situation where business always wins, where management always wins,” Hughes said. “What we are looking to do is create predictable rules and a system that people can trust.”

Disclosure: Dell and University of Texas at Austin have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

This article first appeared on The Texas Tribune.