Why are the majority of Fortune 500 companies incorporated in the State of Delaware? Why are more than 75% of all new initial public offerings in the United States done by companies incorporated in Delaware? Why is Delaware generating more than 25% of its general fund revenue from the incorporation business? And why have other states been unable to steal this business away from Delaware? Here are the top five reasons to form a corporate entity in the State of Delaware.
- The Delaware court system is well established and highly respected. The Delaware Court of Chancery specializes in corporate issues and uses judges instead of juries. This means that in every litigation, a judge with a lot of expertise in complex corporate law matters will preside, and the opinions are relatively consistent. In addition, Delaware has historically and consistently been ranked as one of the top judiciaries in the country.
- Delaware offers a lot of flexibility for structuring a business entity. Delaware’s corporate statutes are very flexible in terms of how a corporation can be structured and board members. The Delaware limited liability company statute creates even more flexibility. If a structure can be imagined, chances are it can be accomplished with a Delaware LLC.
- Delaware offers greater privacy. Delaware entities do not need to disclose officer or director names on the formation documents. Delaware LLCs do not need to disclose the names of its members. This creates a certain level of privacy if needed or desired.
- Investors prefer Delaware entities. Venture Capital investors, investment banks, and other lending institutions typically prefer Delaware entities above all other states because of the reasons stated herein.
- Bi-partisan political consensus. When it comes to corporate law in Delaware, the politicians understand its importance and Delaware’s importance. Therefore, the bi-partisan political consensus in Delaware attempts to keep the Delaware entities’ statutes modern and up-to-date and to rely on Delaware’s corporate law specialists for advice on how to do this.
ABOUT JAMES LANDON
Jim Landon has practiced real estate law since 2002 and has been involved in real estate investment and construction for most of his life. Jim’s practice focuses on real estate transactions and land use.
Jim represents individuals and privately and publicly held companies in the purchase, sale, leasing, financing, and development of real property. He also represents title insurance companies on commercial purchases and refinancing transactions, as well as providing third-party legal opinions regarding Delaware law related to Delaware entities.
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