Abstract
A series of high-profile companies announcing plans to leave the state of Delaware and reincorporate out of state has sparked many commentators to predict a coming wave of corporate exodus from the First State called “DExit.” This paper seeks to explore the DExit “movement” with a particular focus on “controlled companies” and the recent doctrinal developments that have created a perception that Delaware law has become hostile to such governance arrangements. I will begin by discussing a brief history of Delaware’s corporate law and its current role in the American corporate legal system. I will then move to a robust discussion of controlled companies, or companies that have controlling stockholders. I will describe two of the arrangements controlling stockholders use to establish corporate control: dual class common stock and contractual control. I will include a brief analysis of some facts and figures regarding recent Delaware departures, attempting to draw a link between controlled companies and the DExit movement. Then I will discuss recent doctrinal developments in the state of Delaware that have created the perception that Delaware is hostile to controlled companies. This robust discussion will examine both how Delaware courts have treated controlled companies in controlling shareholder and contractual control contexts. Finally, I will catalogue recent changes made by the Delaware Legislature to the Delaware General Corporate Law designed to stop companies from leaving Delaware with a discussion of the efficacy of the changes made. This paper attempts to draw a link between controlled companies and the DExit movement and argues that recent changes to the state’s corporation laws are likely insufficient to quell the fears of corporate controllers.
Recommended Citation
Jack Kanzler,
Denizens of DExit: Why Controlled Companies are the First to Leave the First State,
15
Mich. Bus. & Entrepreneurial L. Rev.
65
(2026).
Available at:
https://repository.law.umich.edu/mbelr/vol15/iss2/2