In a May post, I observed:

As a long-time beneficiary of corporations fleeing other jurisdictions, Delaware may be tempted to put the brakes on its own corporations wishing to flee to the sunny uplands of other states.  Efforts to retard emigration from Delaware may backfire, however.

In June, Nevada's Secretary of State filed an amicus brief in the appeal of Vice Chancellor J. Travis Laster's decision to apply the "entire fairness" standard of review to a proposed reincorporation.  Palkon v. Maffei, 311 A.3d 255 (Del. Ch. 2024).  The brief also warns that efforts to retard reincorporations  could backfire:

Application of the entire fairness standard in this circumstance risks creating a state “exit tax” regime, where plaintiffs sue almost every corporation that attempts to leave Delaware. The trial court’s solution—“cleansing” using a special committee and a stockholder vote—will not prevent meritless lawsuits. The consequences will be disadvantageous for Delaware because: (a) corporations may be reluctant to incorporate in the First State if they think they may have difficulty redomesticating later; (b) others states may similarly choose to raise barriers to redomestication, including moves to Delaware; and (c) the current situation risks prompting a federal response.

I do take issue with the brief's inaccurate terminology.  TripAdvisor's planned to convert pursuant to NRS 92A.195 and Section 266 of the Delaware Code rather than a domestication pursuant to NRS 92A.270.  See Converting A Corporation Is Not Domestication.  

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