Before Filing a Corporate Listing…
Incorporating isn’t right for all businesses, but it’s an important consideration because those who benefit do so handsomely. It can strengthen liability protection, increase credibility, help with gaining capital, and, yes, it can even come with tax advantages for certain businesses. For these reasons, it’s essential to get legal, financial and tax advice before filing a corporate listing.
A crucial decision when it comes to incorporation is the jurisdiction in which to do it. You don’t need to incorporate in your home state, and many choose not to. Why? Some states are more business-friendly than others, particularly when it comes to cost and legal considerations.
Several High-profile Corporations Have Fallen Out of Love With Delaware
In recent decades, Delaware has been the darling of corporate listing destinations. That’s because the state’s business court system is widely viewed as mature, speedy and efficient, among other reasons. However, several high-profile corporations have fallen out of love with Delaware. Notably, in 2024, Elon Musk’s compensation package from Tesla was invalidated by the state. Reacting as he does, he declared, “Never incorporate your company in the state of Delaware.” Instead, as AP reports, he recommended Nevada (where he moved Neuralink’s corporate listing) and Texas (where SpaceX’s corporate listing now resides). Wyoming is also a popular incorporation destination.
So, is it smart to incorporate right here in the Lone Star State? That depends on several legal, financial and tax factors unique to each business. But it’s worth consideration.
Jonathan Macey and Roberta Romano, professors at Yale Law School, recently wrote about Texas disrupting Delaware’s dominance when it comes to corporate charters.
Texas State Senator Bryan Hughes Introduced Senate Bill No. 29
“Not only has Texas created its own Business court system but it may have come up with a better way to compete, as reflected in the latest salvo in the battle for corporate law dominance, fired on February 27, 2025, when Texas State Senator Bryan Hughes introduced Senate Bill No. 29,” Macey and Romano write. They add that the bill “introduces a number of reforms aimed at shoring up Texas’ appeal for corporate chartering business,” with one being a particular game changer: the introduction of evidentiary hearings and advisory opinions on whether directors are, truly, independent.
We’ll let your legal advisor unpack that for you, but Macey and Romano claim it “strikes at Delaware’s Achilles heel” and, coupled with Texas’ favorable business and tax climates, there’s more reason now to consider filing for corporate status in Texas and weigh the pros and cons against these other popular states. Just be sure to consider all factors that affect your business uniquely, including franchise taxes, investor preference, cost, asset protection and more. Feel free to contact us with questions.
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