Delaware: The Mighty Mite Of Corporations
Delaware may be among the United States' smallest states, but it is the biggest when it comes to corporations: more than a third of all corporations listed by the New York Stock Exchange are incorporated in Delaware.
Delaware's allure is explained through a combination of history and law. Although today the state's corporations law is not necessarily less restrictive and less rigid than other states' corporation laws, Delaware could boast more corporation friendly statutes before model corporation laws came into vogue. As a result, corporate lawyers nationwide are more familiar with Delaware's law, and its statutes and case law provide certainty and easy access.
Delaware, more than any other state, relies on franchise tax revenues; thus, Delaware, more than any other state, is committed to remaining a responsive and desirable incorporation site. In addition, Delaware offers a level of certainty and stability: the state's constitution requires a two-thirds vote of both legislative houses to change its corporations statutes.
Delaware also has a specialized court that is staffed by lawyers from the corporate bar, and its highest court has similar expertise. Lawyers in the state continually work to keep Delaware's corporate law current, effective, and flexible. All combine to make Delaware the first state for incorporation.
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