Delaware reforms its legislation to prevent corporate flight after relocation of Musk's companies

Delaware's General Assembly passed a bill in both chambers, which was then signed into law by Gov. Matt Meyer, reforming the state's business legislation. SB 21, which is an amendment to the general corporation law, seeks to ease regulations in an effort to prevent large companies from leaving the state.

Lawmakers and the state government deemed the Democratic-led initiative necessary after Elon Musk relocated SpaceX and Tesla to Texas, openly criticizing Delaware's corporate regulations.

In 2024, a Delaware judge blocked Elon Musk's $56 million Tesla pay package. he lawsuit was initiated by Tesla shareholders, and the judge upheld her decision in multiple rulings.

Tesla’s criticism was echoed by many other large corporations, which pointed to the obstacles imposed by Delaware state courts on their operations.

According to legal correspondent Alexis Kennan, several major companies—including Meta (META), Dropbox (DBX), hedge fund Pershing Square Capital Management, Trade Desk (TTD), Fidelity National Financial (FNF), and Sonoma Pharmaceuticals (SNOA)—have filed plans to relocate their incorporations, following Tesla’s lead.

The reform legislation strengthens definitions in state law, such as "controlling shareholder," and lowers the criteria required to bypass judicial scrutiny over intercompany transactions.

These amendments, along with others, will be applied retroactively to proceedings occurring after February 17.