For more than a century, Delaware enjoyed something close to an automatic presumption in American corporate law: If you were building a major company or preparing to go public, you incorporated in Delaware.
That presumption no longer exists.
On Tuesday, DoorDash, a major online delivery service, informed the Securities and Exchange Commission that the controlling stockholders approved reincorporating the company in Nevada, following unanimous approval from DoorDash’s board.
What makes the decision particularly significant is the rationale.
DoorDash pointed to what it sees as surprising outcomes in Delaware courts and an increasingly litigious corporate environment.
Nevada, by contrast, offers a more statute-focused system that the company believes can provide greater predictability.
For decades, Delaware’s great competitive advantage was predictability. Its specialized Court of Chancery, sophisticated judges, and enormous body of corporate case law gave companies confidence they understood the rules.
Today, critics argue that recent Delaware decisions have weakened that advantage as the state has embraced woke politics, been influenced by plaintiff law firms dominating the state’s political machinery, and tolerated outright legal corruption.
Over the past two years, more than 60 public companies with over $3 trillion in combined market capitalization have left Delaware.
Worse, Delaware is losing a major share of big public companies.