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Why Corporations Web

Why Corporations Web

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Published by ankur3112

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Categories:Types, Business/Law
Published by: ankur3112 on Oct 08, 2010
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10/08/2010

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 Why CorporationsChooseDelaware
 Written by 
Lewis S. Black, Jr.
Printed and Distributed by 
Delaware Department of StateDivision of Corporations
 
why corporationschoose
 
delaware
 
 This publication is designed to provide accurate information with regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged inrendering legal, accounting, or other professional advice. If legal advice or other expert assistance is required, the servicesof a competent professional person should be sought.Copyright © 2007 Delaware Department of State
 
 hy 
orporations 
 hoose 
D
 elaWare 
 i 
 ntroDuCtion 
I am frequently asked why so many corporations are formed in Delaware. Why indeed? It is apparent that Delaware continues to be the favoredstate of incorporation for U.S. businesses. Delaware has been preeminentas the place for businesses to incorporate since the early 1900s, and itsincorporation business, supplemented by the growth in numbers of such“alternative entities” as limited liability companies, limited partnershipsand statutory trusts, continues to grow smartly. Close to a million businessentities have made Delaware their legal home. Furthermore, while thesheer number of corporations organized in Delaware is significant, moresignificant still is the fact that so many large and important corporationsare incorporated in Delaware. Of the corporations that make up theFortune 500, more than onehalf are incorporated in Delaware. It is no wonder that Delaware has become almost a brand name for the “business”of serving as the official home for corporations.So what is the source of Delaware’s prestige—even cachet? Why docorporations choose Delaware? I think the answer is not one thing buta number of things. It includes the Delaware General Corporation Law 

 which is one of the most advanced and flexible corporation statutes in thenation. It includes the Delaware courts and, in particular, Delaware’s highly respected corporations court, the Court of Chancery. It includes the statelegislature which takes seriously its role in keeping the corporation statuteand other business laws current. It includes the Secretary of State’s Office which thinks and acts more like one of the corporations it administersthan a government bureaucracy. There are other, less tangible, factors that go into the mix that makeDelaware appealing to corporations and other business forms. There isthe fact that Delaware is a small state whose populace is generally pro-business. The people of Delaware are aware that the income receivedfrom corporation franchise taxes is an important part of the state budgetand that Delaware law firms that specialize in business law mattersemploy significant numbers of people. As a result, the Delaware citizenrsupports the legislature in keeping Delaware’s business laws stateofthe-art. There is the fact that lawyers all over the country feel comfortable with Delaware corporation law. Many lawyers have learned Delawarecorporation law in law school. Delaware cases are studied in almost every corporations course; hence, American lawyers generally are knowledgeableabout Delaware business law. It provides a
lingua franca
for lawyers and

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