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Coinbase is joining an ever-growing list of companies bidding farewell to Delaware.
The cryptocurrency exchange has filed paperwork with the Securities and Exchange Commission to leave Delaware and reincorporate in Texas, its chief legal officer, Paul Grewal, wrote in a column on Wednesday in The Wall Street Journal.
Texas has become “an increasingly attractive hub for innovative companies like ours,” Grewal wrote. “It’s a shame that it has come to this, but Delaware has left us with little choice.”
Delaware has long been considered one of the country’s most business-friendly states. Nearly 2 million businesses call Delaware their legal home, including more than half of all publicly traded companies, according to the Delaware Secretary of State.
However, a series of Delaware court rulings has made some companies question just how hospitable the state really is for corporations.
“Delaware’s Chancery Court in recent years has been rife with unpredictable outcomes,” Grewal wrote.
Tesla CEO Elon Musk sparked an exodus from the state last year, reincorporating both SpaceX and Tesla in Texas, after a Delaware court sided with minority shareholders to void his proposed $56 billion pay package. Now based in Texas, Tesla shareholders approved a $1 trillion pay package, tied to some lofty benchmarks, earlier this month. Texas law makes it more difficult for shareholders to file lawsuits against a company and its directors.
VC firm Andreessen Horowitz, Roblox, and Dropbox, and Bill Ackman’s Pershing Square Capital have all left Delaware in the last year. Many of them have gone to Nevada, which, like Texas, has styled itself as more business-friendly in recent years.
For Coinbase, Texas offered more “predictability,” Grewal wrote.
“Senate Bill 29 modernized the Texas Business Organizations Code to codify the business-judgment rule, which rightly empowers directors and officers to make the business decisions they need to innovate,” Grewal wrote, referring to new legislation that gives companies more predictability in corporate governance disputes. “This bill, together with the establishment of the Texas Business Court system, gives companies a business-friendly legal ecosystem with strong protections and efficient dispute resolution.”
Coinbase did not immediately respond to a request for comment from Business Insider.
For its part, Delaware has sought to reassure corporations still incorporated in the state. Those companies account for a substantial portion of the state’s revenue.
“Any company thinking about leaving, we’re actively reaching out, we’re talking to them, we’re understanding what the issues are and understanding what ways we can do better,” Gov. Matt Meyer told Business Insider in February. “And for those entities that have already made the decision to leave, we’re going to continue to work hard to earn their trust and hopefully to have them come back.”
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