Choosing a Corporate Home: What We Learned From the 2026 Proxy Season

By Kealan Santistevan, Michael Mencher, Liz Dunshee and Vince Flynn

This is the second post in our series on choosing where to incorporate. Part 1 looked at the trade-offs among Delaware, Nevada and Texas for founder-led technology companies. This post provides a bigger picture look at how market practice is evolving among publicly held companies. The 2026 proxy season yielded a few key takeaways:

• Companies are continuing to explore domicile alternatives.
• Texas has become a more likely contender than in prior years.
• Reincorporation activity remains concentrated and highly company-specific.
• Where a company is incorporated is only part of the governance picture.

What the 2026 votes can – and can’t – tell us

Looking at information through June 30, Cooley’s 2026 proxy season review identified 26 public companies seeking shareholder approval to reincorporate from Delaware to Nevada or Texas since 2024. The alert also flags that Texas attracted more public companies in 2026 than Nevada:

Nevada attracted four Delaware exit (DExit) proposals in 2024 and eight in 2025, but only three in 2026, while Texas increased from one proposal in 2024 and none in 2025 to 10 in 2026.

This is a notable shift, but it is too early to say the market has realigned in any particular direction. First off, Delaware continues to attract a majority of IPO companies, and shareholder support for proposals to reincorporate to Delaware from other states is generally high. However, the latest data points show that some companies are continuing to consider alternatives to Delaware for incorporation, and they are casting a wider net when doing so, with Texas attracting more attention this year.

The 2026 proposals also show that companies are not taking a uniform approach to governance provisions. As we noted in Part 1 of this series, investors and proxy advisors appear to be looking beyond the destination state to the governance package a company would adopt. At this point, though, there is not enough data to isolate how investors are responding to particular shareholder-rights provisions. We will continue to monitor this issue.    

Ownership structures and voting standards affect outcomes

Another theme from the 2026 proxy season is that the population of companies seeking to reincorporate remains small, and the companies pursuing reincorporation are not representative of the public-company market as a whole. Nearly 70% had a controlling shareholder or significant insider voting bloc. Cooley’s 2026 proxy season review notes:

Although 88% of DExit proposals have passed, this high success rate appears to reflect concentrated insider ownership at many of the companies pursuing these reincorporations rather than broad investor support. Assuming insiders voted all of their shares in favor, estimated noninsider support averaged 43% across all DExit proposals, including 30% at controlled companies and 55% at noncontrolled companies. This disparity suggests that institutional investors are generally more skeptical of DExit proposals at controlled companies.

For companies, the practical point is to start planning early – well before a reincorporation proposal goes on the ballot. In addition to the substance and rationale for a proposed reincorporation, a company’s shareholder base, required voting standards, voting rights and voter turnout all affect whether a proposal passes and how it is perceived by the shareholder base. Remember:

• A controlled company may be able to obtain the required shareholder approval even if unaffiliated investors are skeptical.
• Absent high voter turnout, a widely held company may see its proposal fail if the governing documents or applicable law require approval based on outstanding shares, even if it has substantial support among votes cast.

Proxy advisor recommendations are another part of the picture, but not necessarily determinative. ISS generally opposed Texas reincorporations during the 2026 season, although Bloomberg Law reported at least one favorable ISS recommendation. Early reports also indicate that institutional investor voting has been more nuanced than proxy advisor recommendations might suggest. Research from SMU’s Corporate Governance Initiative found that major asset managers have supported at least some reincorporation proposals in 2026, including some Texas reincorporations by some prominent Texas-headquartered companies, but a fuller picture of institutional voting is still emerging. Until aggregate manager-level analysis is available, companies should be cautious about treating either proxy advisor recommendations or selected institutional vote reports as the final word on investor sentiment. Additionally, proxy advisor and institutional investor views may evolve over time if moves to Nevada and Texas eventually come to be viewed as more “mainstream.”

State law continues to develop

The three principal jurisdictions continue to evolve. Delaware’s 2025 Senate Bill 21 amendments created statutory safe harbors for certain interested-party and controlling-shareholder transactions. The Delaware Supreme Court upheld the challenged provisions against constitutional claims in February 2026, and Delaware courts have begun applying the amended Section 144 framework. But the substantive safe harbors are still relatively untested in practice, and litigants are beginning to test whether their requirements have been satisfied in particular cases, such as by challenging the independence of special committees.

Texas is also continuing to develop its Business Court and the case law applying its newer statutory framework. Nevada, meanwhile, is operating a business court pilot while a proposed constitutional business court would still need approval in the 2027 legislative session and by voters in 2028 before it could take effect.

Companies moving from Delaware to another state should also keep in mind that reincorporation can affect the rules governing shareholder litigation, even for claims based on conduct that occurred before the move. In a recent derivative case involving a company that had reincorporated from Delaware to Texas, the Texas Business Court held that Texas law applied to the shareholder’s standing and pre-suit demand obligations. Because the shareholder had not made the pre-suit demand required under Texas law, the court dismissed the action without prejudice. The court assumed that Delaware law governed the underlying claims, which were based on alleged pre-reincorporation misconduct, but did not reach the merits.

As for challenges to the reincorporation decision itself, we expect that boundaries for acceptable reincorporation actions will continue to develop through case law. Early challenges show that certain circumstances may make litigation more likely, such as:

• The company is currently experiencing disputes affected by governance provisions – e.g., shareholder activist pressure or shareholder litigation.
• The directors approving the reincorporation would receive a material nonratable benefit from the conversion.
• The company’s rationale for moving doesn’t neatly align with the actual governance framework that will apply after reincorporation.

Boards should also keep in mind that the state statutes and case law that influence today’s reincorporation decisions may change by the time a dispute actually arises. Early movers will not have as much precedent to guide the move itself or subsequent transaction and litigation planning. For late-stage companies, the 2026 public company votes also provide some insight into how governance choices made before an IPO may be viewed later as the shareholder base broadens.

Shareholder rights may be the next frontier

A company’s decision on where to incorporate is not the end of the story: State corporate laws permit companies to tailor governance provisions to varying extents. In 2025, the Texas Business Organizations Code (TBOC) was amended to expressly permit qualifying public companies to adopt statutory thresholds for derivative suits and, for a narrower set of companies, shareholder proposals. At a high level, these provisions allow:

• A company with common shares listed on a national securities exchange to set an ownership threshold for shareholder derivative suits in its certificate of formation or bylaws. The threshold may be as high as 3% of the company’s outstanding shares.
• A qualifying nationally listed corporation to amend its governing documents to impose additional requirements on shareholders seeking to submit certain proposals for shareholder approval (other than director nominations or procedural resolutions ancillary to the conduct of the meeting). To qualify, the company must have a class of equity securities registered under Section 12(b) of the Securities Exchange Act, be listed on a national securities exchange, and either have its principal office in Texas or be listed on a qualifying Texas-based exchange. The company also must affirmatively elect into the statutory regime through an amendment to its governing documents. Once it does, a shareholder or group generally must:
  • Hold at least $1 million in market value or 3% of the company’s voting shares continuously for at least six months before, and through, the meeting.
  • Solicit holders representing at least 67% of the voting power entitled to vote on the proposal.

These guardrails may be attractive to some companies because they can limit the ability of shareholders with smaller stakes in the company to initiate litigation and submit shareholder proposals. Early practice among companies reincorporating in Texas, however, reflects a range of approaches. Of the 10 companies that sought shareholder approval to reincorporate from Delaware to Texas in 2026:

• Seven adopted, or disclosed an intention to adopt, a derivative suit ownership threshold – three at 1% and four at the statutory maximum of 3%.
• Three adopted, or disclosed an intention to adopt, the shareholder proposal ownership threshold.
• Two companies expressly stated that they would not adopt either provision.
• One company had not adopted either provision but did not foreclose doing so later. The TBOC permits companies to implement these provisions through bylaw amendments, which means that in some circumstances, a company could reincorporate without initially adopting one or both provisions and consider doing so later. Whether the board can take that action without another shareholder vote will depend on the company’s governing documents, and a company would still need to comply with applicable notice and disclosure requirements. 

Boards considering changes to shareholder rights should assess the potential downstream impacts, as well as whether additional disclosure may be appropriate in the context of shareholder votes or capital raising transactions. Investors voting on reincorporation proposals may focus not only on the state a company proposes to move to, but also on how it intends to exercise the governance flexibility that state provides. The 2026 experience suggests that no single approach has yet emerged: Choices have varied materially as to whether, and at what level, to adopt these protections. Moreover, there is not enough data to pinpoint investor reactions to any one provision. Part 1 of this series discusses these state law choices in more detail.

Whether these choices eventually also affect the cost of capital for companies going public or raising money in follow-on offerings is also an open question that will depend on both company-specific and macro-level factors. Event studies from SMU’s Corporate Governance Initiative are tracking market reactions as companies leave Delaware. For the initial cohort of 51 companies, the stock price tended to fall upon the initial announcement and tended to gain smaller amounts around the time of the shareholder vote and when the move took effect; however, these gains were not significant enough to count as a “recovery.” The company-by-company figures varied widely and may reflect differences in the destination state, company size and other factors. Ultimately, the current data doesn’t show a reliable price penalty – or reward – for leaving Delaware, and it also cannot promise that there is no market reaction.

What to bring to the boardroom

Not every board discussion about domicile is a prelude to a move. Our December 3, 2025 CapitalXchange blog post pointed out that companies may use the topic to test governance priorities even if reincorporation is not on the table. For companies moving from monitoring the issue to seriously evaluating a reincorporation, that blog also discussed company-specific factors that affect the decision of whether to reincorporate and the different processes for doing so before and after an IPO. The 2026 proxy season confirms that these factors remain relevant and sharpens the questions to work through with the board and advisors:

1. Why are we considering a move, and is that rationale likely to resonate with our shareholder base?
2. What does our ownership structure and voting standard mean for the path to approval?
3. Which destination-state governance provisions would we adopt, decline or modify?
4. Are we reincorporating on a “clear day” and staying aware of fiduciary duties during the decision-making process?
5. How should we engage with significant shareholders before deciding whether and how to proceed?
6. Will changes to shareholder rights affect our ability to raise capital on favorable terms?

We will continue to watch the market as more institutional voting data and other developments are added to the picture. If you have questions about where to incorporate, corporate governance or IPO readiness, contact Cooley’s capital markets team, or visit the Cooley capital markets practice page.