Recently, a number of corporations have moved their state of incorporation away from Delaware.[1] Many more are now considering doing so. The movement to leave Delaware as a state of incorporation, or “DEXIT,” initially garnered momentum following Elon Musk and Tesla’s June 2024 noisy, high-profile departure to Texas. This movement gained more steam with a July 2025 article posted online by Jai Ramaswamy, Andy Hill, and Kevin McKinley of Andreessen Horowitz arguing in favor of leaving Delaware as a state of incorporation.[2] Most corporations considering leaving Delaware for more pro-management jurisdictions, it seems, have focused primarily on moving to Texas or Nevada. However, we believe that one nearby state, Maryland, perhaps being overlooked due to its liberal politics, provides the sort of pro-management corporation law sought by these corporations and should be considered before deciding on Texas or Nevada.
To start, Maryland is well-accepted by Wall Street as a state of incorporation for public companies, particularly in the real estate investment trust (“REIT”) sector. Over 70 percent of publicly traded REITs are incorporated or formed in Maryland.[3] Further, many mutual funds and mutual fund complexes have also historically been incorporated in Maryland. The data demonstrates that of new initial public offerings (“IPOs”) in excess of $250 million (excluding SPACs) from 2022 through the end of the first half of 2025, most companies still selected Delaware (on average about 80 percent of IPOs per year); but Nevada and Maryland were running nearly even in second place with 5–10 percent of the IPOs on average each year.[4] Only one other state, Florida, had two IPOs. All other states had one or none.
Why Maryland? The Maryland General Corporation Law (“MGCL”) includes a number of statutory provisions unique to Maryland that are not found in the corporation laws of any other state and that give directors of Maryland corporations protection, flexibility, leeway, and deference in decision-making—and, as a result, provide greater leverage in dealing with third parties, particularly in the context of an acquisition of control.
“Just Say No” Defense
One such provision is Maryland’s “just say no” provision. MGCL section 2‑405.1(f)(1) establishes that directors are not required to accept, recommend, or respond to acquisition proposals. This provision effectively grants directors the absolute statutory authority to decline takeover bids outright.
By contrast, in Delaware, the directors’ “just say no defense” has developed by case law; is not absolute; has seemingly ebbed and flowed in its strength over the decades; and is subject to a heightened scrutiny review, which has been rejected by statute in Maryland. (See the “Anti-Unocal” discussion below.) While Nevada similarly rejects enhanced scrutiny review in this context, Texas and Nevada grant directors only general authority to manage corporate affairs through business-judgment principles without expressly recognizing “just say no” as a statutory right.
Anti-Revlon
Maryland rejects Delaware’s Revlon duty requiring boards to maximize price when a sale becomes inevitable. Under MGCL section 2-405.1(f)(5)(ii), directors are not required to act based solely on the amount or form of consideration offered in a potential change of control. Maryland, in MGCL section 2-405.1(h), also bars courts from applying heightened scrutiny to board decisions, including those relating to acquisitions. Moreover, the statute makes these provisions the exclusive source of director duties, preventing the importation of judicially created Revlon-style obligations. The Maryland General Assembly adopted these provisions specifically to override the Maryland Court of Appeals’ suggestion of judicially created enhanced duties in a sale context in Shenker v. Laureate Education, Inc.[5]
While there is little case law in Nevada interpreting its statute, the Nevada statute seems similarly to reject Revlon by virtue of its constituency provision, which allows directors of a Nevada corporation to consider many other constituencies, such as employees, suppliers, creditors, or customers, and put the interests of those constituencies ahead of the interests of stockholders. Constituency statutes, however, come with their own disadvantages since it may become more difficult to attract investors and raise capital if directors are permitted to place the interests of other constituencies ahead of the investor/stockholder.
By contrast, Texas has not expressly rejected Revlon by statute or caselaw in hostile takeover settings, leaving Texas’s takeover standards uncertain. Maryland, on the other hand, clearly allows boards to reject unsolicited bids and eliminates any auction duties, but at the same time remains attractive to investors and capital formation because it does not allow directors to place other constituencies ahead of stockholders in their corporate decision-making.
Anti-Unocal
Delaware applies enhanced scrutiny to defensive measures, particularly in a change in control context under the Unocal Corp. v. Mesa Petroleum Co. framework,[6] requiring directors to reasonably identify a threat and adopt a proportionate response. Unitrin, Inc. v. American General Corp. clarifies that coercive or preclusive defenses fall outside the range of reasonableness and fail enhanced review.[7] Accordingly, Delaware boards bear the burden of justifying the proportionality of defensive actions under Unocal.
Maryland law takes a significantly different approach by having a statutory anti-Unocal provision that ensures that all decisions, including those related to changes in control and those involving the exercise of the rights of stockholders, are reviewed solely under the lens of the business judgment rule, without any heightened scrutiny standard.
Nevada mostly rejects Unocal-style enhanced scrutiny and applies the business judgment rule. Nevada does, however, apply Unocal-style heightened scrutiny in cases involving the exercise of the voting rights of stockholders generally, and specifically with respect to the removal of directors. Texas has not yet resolved whether Unocal applies.
Unsolicited Takeovers Act
By providing directors with a unique and immediate charter-bypassing authority, Maryland’s Unsolicited Takeovers Act (“MUTA”) gives boards of certain public companies superior flexibility and speed to resist hostile takeover bids. It authorizes directors, “notwithstanding any provision in the charter or bylaws,” to adopt certain enumerated takeover defenses, including staggered board terms, supermajority removal requirements, exclusive authority to set board size, and exclusive control over filling board vacancies. Election into MUTA requires only board action, allowing swift adoption even during a takeover attempt. With these available tools at boards’ disposal, MUTA ensures that boards can establish stability at critical moments without stockholder approval.
Delaware, Texas, and Nevada allow similar defenses only if adopted in governing documents. Many of these defenses require charter amendments, necessitating stockholder approval (often unattainable as a practical matter), while some may be adopted through board-approved bylaw amendments. Only in one other state, Indiana, does any U.S. corporation law grant the board MUTA’s level of unilateral statutory authority to override the charter and bylaws.
Bylaw Allocation Authority
The balance of power between the board and stockholders often plays out on the issue of who has the power to amend or repeal corporate bylaws. Ensuring that this power resides in the board is helpful in protecting directors from activist-driven proposals and can be fundamental to stable governance. MGCL section 2-104(b)(1) permits Maryland corporations to vest exclusive authority in the board of directors to amend or repeal bylaws, thereby eliminating stockholder amendment rights if the charter or bylaws so provide. This ensures that directors, not stockholders, control foundational governance rules, which, in turn, insulates boards from campaigns that seek to mandate proxy access, special meeting rights, or other potentially destabilizing measures.
Delaware, by contrast, reserves bylaw authority primarily to stockholders, permitting concurrent board power only if expressly provided in the charter, and does not permit the elimination of this stockholder power. Texas and Nevada also authorize both directors and stockholders to adopt or amend bylaws. None of the three, however, provide Maryland’s statutory approval of exclusive board power over bylaws. Maryland, therefore, gives directors greater certainty and protection against activist pressure through bylaw proposals.
Indemnification and Exculpation
Maryland offers broad indemnification and exculpation protections for directors and officers. MGCL section 2-418 authorizes indemnification for judgments, settlements, and expenses in both third-party and derivative actions; permits advancement upon an undertaking; and extends coverage to officers, employees, and agents. Maryland’s indemnification statute permits indemnification unless the director (i) acted in bad faith; (ii) acted with active and deliberate dishonesty; (iii) received an improper personal benefit; or (iv) in a criminal case, knew that their action was unlawful. Maryland law also allows corporations to exculpate directors and officers from personal liability, subject only to two narrow exceptions: (i) where the director receives an improper personal benefit or (ii) where the director engaged in active and deliberate dishonesty. These provisions reduce litigation risk and give directors confidence to act decisively.
In comparison, Delaware’s indemnification under Delaware General Corporation Law section 145 and exculpation under section 102(b)(7) is narrower, and its officer exculpation was only recently added in 2022.
Texas’s indemnification statute permits indemnification unless the director engaged in (i) willful or intentional misconduct, (ii) breached their duty of loyalty, or (iii) committed an action not in good faith that constituted a breach of duty to the corporation. Both the “breach of duty of loyalty” prong and the “any other breach not in good faith” prong seem to provide less indemnification protection to directors of a Texas corporation than what directors of a Maryland corporation receive. Similarly, Texas’s exculpation statute allows a Texas corporation to adopt a provision in its Certificate of Formation, eliminating the liability of directors for monetary damages unless the director (i) breaches the duty of loyalty, (ii) commits an action not in good faith that either constitutes a breach of duty to the corporation or involves intentional misconduct or a knowing violation of law, (iii) receives an improper personal benefit, or (iv) is otherwise liable under another Texas statute. Thus, Texas’s exculpation exceptions are much broader and less protective of directors than those under the Maryland statute, although the new “codified business judgment rule” provisions of Senate Bill (“SB”) 29, discussed below, in circumstances in which they may apply, may limit liability for or exculpate certain directors unless that director committed (i) fraud, (ii) intentional misconduct, (iii) an ultra vires act, or (iv) a knowing violation of law.
Nevada law on exculpation is similar to that of Texas under SB 29 in that, under Nevada Revised Statutes (“NRS”) section 78.138, directors are presumed to act in good faith, on an informed basis, and with a view to the interests of the corporation—and only if that standard is rebutted and only if it is established that the director committed (i) fraud, (ii) intentional misconduct, or (iii) a knowing violation of law can a director be liable. Nevada law, however, differs from all of the other states in that this is the default law, unless the corporation’s articles provide otherwise; and it differs from Texas in that this standard applies to all Nevada corporations, not only to public corporations or certain Nevada corporations. Nevada’s indemnification statutes (NRS sections 78.7502 and 78.751) appear to be among the most permissive of the group, permitting indemnification unless the director (i) is adjudged liable pursuant to the very pro-director standard of NRS section 78.138 set forth above or (ii) either (a) is determined to have acted in good faith and not opposed to the interests of the corporation, if the case is a derivative suit, or (b) is determined to have acted in good faith, not opposed to the interests of the corporation, and had no reasonable cause to believe their conduct was unlawful with respect to any criminal case, if the case was not a derivative suit.
Texas offers indemnification and exculpation protection that is likely narrower than that offered in Maryland or Nevada regardless of which Texas exculpation provisions may apply to a particular Texas corporation. Nevada, on the other hand, likely offers greater director and officer indemnification and exculpation protection than any of the other three states.
Statutory Authorization for Stockholder Rights Plans
Maryland’s corporation statute expressly authorizes boards to adopt stockholder rights plans, providing a predictable and stable legal foundation for “poison pill” implementation and making Maryland a favored venue for their use. MGCL section 2-201(c)(1) provides that a board may, “in its sole discretion,” authorize the issuance of rights, options, or warrants to stockholders on terms it determines appropriate. Furthermore, MGCL section 2-201(c)(2)(ii) permits directors to bar a newly elected board from redeeming or modifying a poison pill for up to 180 days during a control contest. Together, these provisions provide one of the strongest statutory foundations for rights plans among all U.S. states, giving boards confidence that defenses cannot be overturned immediately after a proxy fight. Further, the board’s authority to adopt and trigger a poison pill was also recently upheld judicially in Maryland in Hartman v. Silver Star Properties REIT, Inc.[8]
Delaware has not codified poison pill authority. Instead, the Delaware Supreme Court first upheld poison pills in Moran v. Household International, Inc., under directors’ general statutory power to issue stock.[9] But poison pills remain subject to the enhanced scrutiny standard established by the holding in Unocal. This enhanced scrutiny requires directors to show both a reasonable threat and a proportionate response.
Nevada has a statute authorizing the adoption of poison pills, but it lacks the “sole discretion” deference granted to the directors under the Maryland statute. There is no Nevada case that has yet upheld the triggering of a poison pill under Nevada law, making Maryland’s statute and judicial position stronger. Nevada’s statute does, however, protect poison pill decisions from enhanced scrutiny, like Maryland. Texas lacks a poison pill–specific statute or case law. Instead, boards rely on their general authority to issue securities under the Texas Business Organizations Code (“Texas BOC”), with any such decision subject to common law business judgment principles and, for corporations that have opted into the SB 29 framework, the codified business judgment presumption established thereunder.
Business Combinations Statute
Maryland’s Business Combinations Act bars business combinations with an “interested stockholder” for five years after a stockholder becomes an interested stockholder unless the board approves the transaction, which is among the most restrictive time periods of any state’s anti-takeover law. An “interested stockholder” includes anyone holding 10 percent or more of voting power, a lower threshold than Delaware’s 15 percent. Even after the freeze, transactions require either approval by 80 percent of all voting power and two-thirds of disinterested shares or compliance with strict “fair price” provisions. Opt-outs are tightly restricted, preserving statutory strength.
The Delaware General Corporation Law’s section 203 imposes only a three-year freeze with broader exceptions, such as the 85 percent tender offer carve-out. Nevada’s statute limits restrictions to two years and permits easy opt-outs. Texas imposes a three-year bar but allows flexible opt-outs and requires only two-thirds disinterested stockholder approval. Maryland’s longer duration, lower thresholds, and strict opt-out rules provide boards with significantly more leverage against hostile acquirers.
Control Share Acquisition Statute
Maryland’s Control Share Acquisition Act ensures that voting rights tied to “control shares”—those acquired in excess of each of the 10 percent, 33⅓ percent, or 50 percent ownership thresholds—remain suspended absent approval by two-thirds of disinterested stockholders. Acquirers must provide disclosure, and corporations may call special meetings to decide on restoration of voting rights. If rights are denied, corporations may redeem the excess shares at fair value. This framework deters creeping accumulations and ensures proper consent before control shifts.
Delaware has not enacted a control share statute, leaving corporations to rely on alternative defensive measures. Nevada has adopted a control share statute that permits stockholders to acquire up to 20 percent before the statute applies, allowing a hostile acquirer to gain a significantly greater foothold before triggering the defensive measures than in Maryland. Nevada further allows voting rights to be restored by a simple majority of disinterested stockholders, compared to Maryland’s two-thirds supermajority requirement. Texas has not adopted a control share statute or any comparable restrictions. As a result, Maryland’s statute is the most comprehensive, as it affords boards the strongest statutory protection against creeping or stealth acquisitions.
Legislative Responsiveness
Maryland’s legislature has shown itself to be responsive in preserving the statutory intent of its corporation law even in the face of occasionally misguided judicial activism. In Shenker, the Maryland Court of Appeals (now the Supreme Court) incorrectly held that directors owed fiduciary duties other than those enumerated by the MGCL. To prevent Delaware-style judicially determined fiduciary duties from evolving in Maryland, the General Assembly amended MGCL section 2-405.1 in 2016, confirming that the standard of conduct in Maryland runs only to the corporation and that the statute is the exclusive source of the standard of conduct of directors of Maryland corporations and their obligations. The Maryland Supreme Court later upheld the standard established by these statutory amendments in Eastland Food Corp. v. Mekhaya.[10] This demonstrates the Maryland legislature’s willingness to respond firmly to protect the integrity of the MGCL and prevent judicially created duties. Maryland’s willingness to recalibrate statutory law ensures predictability not yet tested in newly competing jurisdictions.
Delaware, by contrast, has allowed fiduciary duty law to develop almost entirely through the judiciary and case law, with less (until the recent threat of DEXIT) of a statutory scheme and rare legislative correction.
Business Courts
Historically, one of Delaware’s greatest attractions as a state of incorporation has been the sophistication, consistency, and predictability of its judiciary, most particularly, its world-renowned Court of Chancery. Comparatively, neither Texas nor Nevada has any lengthy statewide track record handling sophisticated business disputes, any long-term experience with specialized courts, or any extensive well of business and corporate case law to draw on to predict outcomes or on which businesses or litigants may rely. Texas only recently established a business court in 2024, and Nevada only has localized business courts in Las Vegas and Reno but not a statewide program. In contrast, Maryland’s Business and Technology Case Management Program has been in operation since 2003 and has generated a body of business and corporate case law over that time on which parties can rely.
Recent Texas Legislation Directed at Public Companies
In fairness, Texas did recently adopt several laws that have attracted attention, enacting a series of provisions to make the Texas BOC more attractive, particularly to public companies. In June 2025, Texas enacted Senate Bill 29 (“SB 29”), which, among other things, (i) allows certain Texas corporations to provide a presumption for the directors that they have met their duties in taking actions, (ii) allows certain Texas corporations to limit derivative actions, (iii) limits legal fees in disclosure-only securities settlements, (iv) limits the definition of books and records available for inspection, and (v) allows certain Texas corporations to obtain a preemptive judicial determination of the independence and disinterestedness of a special committee. In two other bills, Texas took aim at the public company proxy process: (1) SB 1057, which limited shareholder proposals by enacting higher thresholds for making shareholder proposals for companies incorporated in Texas or with certain other Texas connections than those established by U.S. Securities & Exchange Commission Rule 14a-8, and (2) SB 2337, which targets proxy advisors and makes it burdensome for those firms to advise shareholders of companies with Texas ties.
For public companies and companies that are able to opt-in in their governing documents (which may not be possible or practical for many Texas corporations), SB 29 purports to create a statutory presumption that the directors have met their standard of conduct under what typically might be described as the business judgment rule, that they (i) acted in good faith, (ii) on an informed basis, (iii) in furtherance of the interests of the corporation, and (iv) in obedience to the law and governing documents. This presumption may only be rebutted by fraud, intentional misconduct, an ultra vires act, or a knowing violation of law. Unlike Maryland, however, where the standard of conduct is clearly stated by statute and then the statute further presumes that all corporate directors, regardless of whether the corporation is public or private or any opt-in, have met that standard, Texas does not have a statute that articulates the fiduciary duty or standard of conduct of directors of a Texas corporation along the lines of the presumption in SB 29. The result is that there may be a mismatch in the future between what a court views as the duties of a director and the presumptions established by SB 29, meaning that the presumptions established by SB 29 may not extend to all of the elements of the duties of a director of a Texas corporation. Yet, a number of commentators have nonetheless referred to this as the codification of the business judgment rule in Texas. Moreover, as we point out, unlike Maryland, whose codified business judgment rule and presumption apply to all Maryland corporations, many, if not most, Texas corporations and their directors will likely be unable to opt-in and therefore unable to avail themselves of the statutory “business judgment rule” protections of SB 29. SB 29 also allows publicly traded Texas corporations and Texas corporations with five hundred or more stockholders that are able to opt-in to the “codified business judgment rule” to restrict stockholder derivative litigation by adopting a minimum beneficial common share ownership threshold in order to institute a derivative proceeding in an amount up to 3 percent in the certificate of formation or bylaws. SB 29 prohibits the recovery of attorney fees for derivative proceedings resulting solely in additional or amended disclosures to stockholders, placing Texas law on equal footing with recent case law in Delaware. SB 29 narrows stockholders’ statutory books and records inspection rights by excluding emails, text messages, and social media communications, unless such communications directly affect corporate action. In a novel provision, SB 29 authorizes publicly traded Texas corporations and Texas corporations that are able to opt-in to the “codified business judgment rule” to petition the Texas Business Court for an advance determination of the independence and disinterestedness of a special committee of directors formed to review and approve a transaction. Such a determination is “dispositive,” absent facts, not originally presented to the court, later being presented constituting evidence sufficient to prove that a director is not independent or disinterested (which, on some level, seems to defeat the purpose of the advance preliminary determination being dispositive).
To make a “shareholder proposal” under SB 1057, a stockholder must: (1) hold at least (i) 3 percent or (ii) $1 million in market value, of the corporation’s outstanding voting shares; (2) satisfy a six-month continuous ownership requirement preceding and through the stockholder meeting; and (3) solicit approval from holders of at least 67 percent of the corporation’s voting power on the proposal.
Texas seeks to expand protections and management authority for directors and officers through the provisions of SBs 29, 1057, and 2337; however, it is important to note that the practical impact of these provisions may be limited as many provisions apply only to public companies, or to corporations that are able to and expressly do opt-in through their governing documents.
Conclusion
As illustrated above, Maryland provides boards with greater discretion and stability in takeover-response strategies than Delaware, Nevada, or Texas. As a result, depending on what a corporation seeking to DEXIT is looking for in a new state, and what the needs and interests of its board and stockholders may be, Maryland may provide a better alternative than either Texas or Nevada and should be compared and considered before any decision on state of reincorporation is made.
The authors would like to thank Marshall Paul, a partner at Saul Ewing, LLP; Hirsh Ament, a partner at Venable LLP; Rew Goodenow, a partner at Parsons Behle & Latimer; and Emily Leitch, a partner at Jackson Lewis LLP, for their input. ↑
Jai Ramaswamy, Andy Hill, & Kevin McKinley, We’re Leaving Delaware, and We Think You Should Consider Leaving Too, Andreessen Horowitz (July 9, 2025). ↑
Hirsh Ament et al., Protecting REITs Under Maryland Law, JD Supra (Nov. 5, 2024). ↑
Gaurav Jetley & Nick Mulford, DExit: Reincorporation Data Seem to Support the Hype, Harv. L. Sch. Forum on Corp. Governance (Sep. 23, 2025). ↑
983 A.2d 408 (Md. 2009). ↑
493 A.2d 946 (Del. 1985). ↑
651 A.2d 1361 (Del. 1995). ↑
No. 24-C-23-003722 (Cir. Ct. Balt. City Jan. 21, 2025). ↑
500 A.2d 1346 (Del. 1985). ↑
301 A.3d 308 (Md. 2023). ↑
