Billionaire entrepreneur Elon Musk is advocating for businessmen to steer clear of incorporating their businesses in Delaware, urging them to relocate as swiftly as possible if they have already done so.
In a bold move, Musk declared on his X platform, previously known as Twitter, that SpaceX, his aerospace company, had officially shifted its state of incorporation from Delaware to Texas. He emphasized this shift by sharing a snapshot of the letter from the state of Texas acknowledging SpaceX’s incorporation within the Lone Star State.
This relocation trend extends beyond SpaceX, with Musk’s brain-chip implant venture, Neuralink, also opting to change its incorporation location from Delaware to Nevada in recent times.
The decision to move away from Delaware follows a significant legal setback for Musk, as a Delaware judge nullified his $56 billion pay package amidst Tesla’s skyrocketing market valuation, which at one point exceeded a trillion dollars.
Musk’s vocal support for Texas as an alternative destination for incorporation is evident in his earlier statement on X, where he announced Tesla’s intention to seek shareholder approval for transferring its state of incorporation to Texas, following an overwhelming 87% endorsement from respondents.
Delaware’s political landscape, often associated with liberal policies and occasionally perceived as hostile to businesses, has drawn criticism from various quarters. Notably, Delaware’s ties to President Biden have not shielded it from scrutiny, with recent legal battles involving media giant Fox News further tarnishing its reputation.
Fox News found itself embroiled in litigation with Dominion Voting Systems, eventually settling for a substantial sum in a Delaware court. This episode prompted sharp criticism of Delaware’s judicial system from Fox’s former chief counsel, casting doubt on the fairness and integrity of its civil justice system.
The high-profile moves by Musk’s companies away from Delaware underscore a broader trend of businesses seeking more favorable regulatory environments, with Texas emerging as a prime destination for incorporation among entrepreneurs looking to navigate a more business-friendly landscape.
