There are several reasons why more firms are formed in Delaware than in any other state. This article highlights a few of the explanations provided by the Delaware Secretary of State’s Office, as well as factors that were important to my clients when deciding to join the half-million businesses that have incorporated in Delaware, including more than half of all publicly traded companies in the United States and 60 percent of Fortune 500 companies. It then discusses the major disadvantages of incorporating in Delaware and why it is not a one-size-fits-all option.
1. The Delaware Court of Chancery’s Corporate Law Expertise.
The Court of Chancery in Delaware is a highly renowned court that concentrates on business concerns. Because of its focus, the Court of Chancery has extensive experience and knowledge in handling complicated business issues.
No business likes to be engaged in litigation, but if it is, it is encouraging to know that the disagreement will be addressed by a highly competent judge who is well-versed in handling corporate law issues. In other places, your business disagreement may be decided by a jury.
2. Delaware Corporate Case Law’s Extensive Precedent.
Due to the significant frequency of business lawsuits, corporate case law in Delaware is substantially more broad than in other states.
More case law indicates that the anticipated court result of a business law issue is more predictable. If there have been multiple instances comparable to the one before your organisation, there is less ambiguity about the court conclusion, which may be critical when determining whether to settle a dispute or spend the time and cost to fight.