UK Founder Series: Charting a New Course – Reincorporating Outside Delaware

Orrick's Founder Series offers monthly top tips for UK startups on key considerations at each stage of their lifecycle, from incorporating a company through to possible exit strategies. The Series is written by members of our market-leading London Technology Companies Group (TCG), with contributions from other specialists. Our Band 1-ranked London TCG team successfully completed over 350 financings and tech M&A transactions in 2023 & 2024 totaling $5B+ and has dominated the European venture capital tech market for nine years in a row (Pitchbook, FY 2024). View previous series instalments here.

Delaware has long been the go-to state for public companies and venture-backed startups looking to incorporate in the U.S. The reasons are straightforward: it offers a business-friendly legal framework, predictable case law and is widely recognized by investors. For many founders, especially those planning to expand into the U.S., Delaware feels like the safe and expected choice.

But recent headlines have highlighted a small number of high-profile companies shifting their corporate domicile away from Delaware. Now some international founders—including UK-based teams—are beginning to question whether following suit might make sense.

If you’re a UK founder operating in or entering the U.S. market, here are 10 things you need to know before considering a move away from Delaware.

1. Who’s Actually Making the Move?

Despite growing interest, most companies exiting Delaware share a similar profile: they’re large public companies or have a dominant shareholder driving the change. These decisions are often tied to unique governance goals or philosophical stances. Early-stage startups, by contrast, are not joining this shift in significant numbers.

If you’re still scaling or fundraising, it’s important not to mistake headline noise for a true trend. At this stage, any decision to reincorporate should be driven by your company’s specific legal, commercial or operational needs—not by momentum.

2. This Is a Strategic, Not Symbolic, Decision

Reincorporation isn’t a branding exercise. It has far-reaching legal and operational implications. A change in corporate domicile can affect shareholder rights, governance frameworks and investor relationships. It may also impact existing agreements, employee equity plans and your overall cap table architecture.

Before making any change, you should assess how it aligns with your company’s growth strategy—and whether the potential benefits outweigh the disruption.

3. Delaware Has a Clear Playbook—Other States May Not

Delaware offers clarity. Its legal structures, processes and corporate forms are well-established and widely understood by lawyers, investors and boards alike.

By contrast, other jurisdictions are still developing their playbooks. States like Texas or Nevada may require custom documentation, interpretation of less-settled laws and additional advisory input to navigate unfamiliar procedures. That means added time, complexity and cost.

4. Legal Infrastructure Still Favors Delaware

Delaware’s extensive case law and specialised Court of Chancery offer a level of legal certainty that’s hard to match. For companies, that translates into clearer guidance on governance disputes, fiduciary duties and shareholder protections.

Other states simply aren’t there yet. While several are attempting to modernise, they don’t offer the same depth of precedent or specialised forums for corporate matters. That introduces risk—and may give some investors pause.

5. A Closer Look at Texas

Texas has gained attention following the 2024 launch of its business court, which aims to handle complex commercial matters more efficiently. For companies with a meaningful operational footprint in Texas, this development is promising.

However, it's early days. The new court’s effectiveness, consistency and broader impact on corporate law remain to be seen. While the infrastructure is improving, the legal framework is still developing. Founders considering Texas should proceed with cautious optimism—and strong legal guidance.

6. Consider the Benefits of Waiting

If there’s no urgent reason to reincorporate, patience might be the more strategic choice. Legal and procedural frameworks in alternative states are evolving, and early adopters are helping to shape the landscape. By waiting, you can benefit from those lessons—without bearing the costs of trial and error.

In the meantime, Delaware remains the most predictable and investor-aligned jurisdiction for startups.

7. Being First Comes at a Cost

Early movers play a valuable role in helping define what reincorporation outside Delaware looks like. But that pioneering comes with risk: higher legal and administrative costs, more back-and-forth with regulators and longer timelines to execute.

Founders considering this path need a well-prepared advisory team across legal, tax and accounting, as well as investor alignment before moving forward.

8. Conversion Isn’t Plug-and-Play

Legally converting from a Delaware corporation to another jurisdiction involves more than a simple filing. It typically requires board and stockholder approval, along with detailed revisions to your constitutional documents.

Your certificate of incorporation, bylaws and key investor agreements will need to be redrafted to comply with the laws of your new home state. It's a full-scale legal transformation—not an administrative update.

9. Investors Will Expect a Say

Institutional investors generally have strong views about legal frameworks, particularly those that relate to governance, shareholder protections and enforceability. For many, Delaware remains the standard.

If you’re contemplating a move, involve your investors early. Their support—or lack thereof—can make or break the plan. It’s also important to understand how the proposed shift could affect future fundraising dynamics.

10. Timing Is Everything

Lawyers often recommend that major governance actions like reincorporation be taken on a “clear day”—meaning at a time when the company is not in the middle of litigation, a financing round or a commercial transaction.

Attempting to convert mid-deal or under pressure can lead to unnecessary legal friction, timing delays and questions from stakeholders. Choosing the right moment is just as important as choosing the right state.

Bottom Line: A Move Worth Considering—But Only With the Right Rationale

Reincorporating outside Delaware may be viable for some companies, particularly those with a clear commercial or regulatory need. But it is not a shortcut, nor a default play. For most UK-founded startups, Delaware remains the most robust, reliable and investor-preferred option.

Any move should be well-reasoned, carefully timed and supported by advisors with a deep understanding of the U.S. venture landscape. If you are interested in learning more, contact Jamie Moore, Anik Guha, Siddharth Balani or another member of the Orrick team.