(FORTUNE Magazine) – Already home to many large U.S. companies, Delaware is spiffing up its welcome mat. A new state law limits the liability of outside directors, making it easier for corporations to recruit qualified people for their boards. Since the law was enacted in July, incorporation filings there have increased 15%. A company does not literally have to move its headquarters to reincorporate and take advantage of Delaware's statutes. A disproportionate number of new registrants are from California. Genentech, the biotechnology pioneer, is asking shareholders to approve the switch. Another biotech company, Collagen Corp., voted in November to file for a Delaware address. Says Vice President William W. Jaeger: ''Emerging companies need the wisdom of experienced executives on their boards, and California law provides them little protection.'' Under Delaware's new law, directors get protection for such mistakes as negligence or lack of what lawyers call due care: A shareholder cannot, for instance, sue a director for unintentionally failing to master facts he should know. The law does not, however, shield directors against suits based on illegal activity or misconduct. Nor does it allow a company to add limited-liability provisions to its bylaws without approval by the shareholders. Such hospitality brought Delaware $131 million in corporate fees and taxes in the fiscal year that ended in June -- the state's second-highest source of revenue after personal income taxes. The new law has caused concern in other states. Maryland has already passed limited-liability legislation to head off a Delaware exodus. And Michigan, prodded by the giant retailer K mart, is considering a similar measure.