Why do over half of all publicly traded companies call Delaware their corporate home? The list of reasons is compelling and holds as much appeal for start-ups as it does for large companies, making Delaware worth your consideration when you’re choosing where to incorporate.
Why is the country’s first state so popular when it comes to incorporation?
Delaware is popular first and foremost because it’s popular. Your company must abide by the corporate laws of the state in which you incorporate. The fact that so many people incorporate in Delaware means lawyers, investors, and other stakeholders in your company are likely already very familiar with Delaware General Corporation Law and the implications of representing, investing in, or doing business with your company.
Delaware also has a well-earned reputation for being business friendly. Since incorporation fees drive nearly 25% of the state’s general fund revenue, Delaware laws tend to evolve in a very pro-business manner so it can continue to attract businesses to incorporate in the state. The Delaware Court of Chancery was established in 1792 and is widely recognized today as the country’s preeminent forum for addressing complex disputes involving corporations and other business entities. The long history of the Chancery Court provides a body of case law and interpretation that makes it much easier for attorneys to provide clear and definitive guidance—the same can’t necessarily be said of other states.
Finally, as part of its pro-business reputation, Delaware is known for being very proactive in responding to changes in the business environment. Delaware was one of the first states to allow corporations to conduct business by “electronic transmission” (essentially email), and “remote communications” (think Skype and Google Hangouts), to broaden the scope of technologies that could be used in the course of their corporate governance.
Thanks to its long history and pro-business reputation, the number of companies choosing Delaware as their state of incorporation continues to grow. Right now over a million businesses are incorporated in Delaware, including 65% of Fortune 500 companies. Odds are, you too will end up incorporating in Delaware.
Ready to incorporate in Delaware? Fidelity can help with that.
