Gas and oil giant ExxonMobil will likely move its legal home from New Jersey to Texas after shareholders approved a proposal to do so, according to a preliminary count.
ExxonMobil’s board of directors unanimously recommended the legal relocation in March, saying Texas’ legal and regulatory environment was more business friendly.
“Aligning our legal home with our operating home, in a state that understands our business and has a stake in the company’s success, is important.” Darren Woods, ExxonMobil CEO, said at the time.
Two advisory firms, Glass Lewis and Institutional Shareholder Services, recommended against the relocation, arguing the move could allow Exxon to make it harder for shareholders to sue the company.
Shortly after, Attorney General Ken Paxton sued Institutional Shareholder Services for allegedly misleading investors. He cited the firm’s recommendation against Exxon’s relocation as a reason for the lawsuit.
Exxon is headquartered in a suburb of Houston but has been incorporated in New Jersey since 1882 when the company was still Standard Oil of New Jersey, according to the company. The company moved its headquarters to Irving in 1989 and says about 75% of the company’s U.S. employees are in Texas.
James Lee, CEO of the Dallas-based Texas Stock Exchange, lauded the shareholder vote in a statement.
“Exxon’s move is also a watershed moment for America’s capital markets, and the direct result of Governor Abbott and the legislature transforming Texas into the top jurisdiction for business in the U.S,” Lee said. “Hundreds of companies representing trillions of dollars in market capitalization are poised to make similar moves. With today’s action, it is clear the faucet is about to unload.”
A state in which a company has its legal domicile in is important because it determines their taxes and what laws they have to follow.
Most of the country’s largest businesses have their legal domicile in Delaware due to its special business court system, according to the Harvard Business Center. Texas aims to offer a similar system with the Texas Business Court, which was created in 2023 to handle complex business disputes.
Tesla, SpaceX and Coinbase are among the large companies that have already incorporated in Texas.
Dylan Duke is KERA’s Breaking News Reporter. Got a tip? Email Dylan Duke at dduke@kera.org.
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