Elon Musk at the Porte de Versailles exhibition centre in Paris, in June, 2023.Gonzalo Fuentes/Reuters

Marie-Josée Neveu, Sean Stevens and Sarah Gingrich are partners at Fasken Martineau DuMoulin LLP.

Amid a highly public feud between Elon Musk and Delaware courts, Tesla Inc. TSLA-Q recently moved its corporate domicile from Delaware to Texas. The possibility that this phenomenon of U.S. companies reincorporating out of Delaware – cheekily called “Dexit” – could catch on more widely has prompted a race to attract them among other U.S. states. But while that may be good news for large shareholders in the U.S., it’s generally bad news for their companies and smaller shareholders. That makes Canada’s boardrooms a competitive advantage in the new fight for investment capital.

Talk of Dexit began with the legal battle over Mr. Musk’s US$55.8-billion pay package at Tesla in 2023. Delaware courts twice refused to allow the package, finding that Tesla’s board was improperly influenced by........

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