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DELAWARE
ADVANTAGES
“More than 850,000 business entities have
their legal home in Delaware including more than 50%
of all U.S. publicly-traded companies and 63% of the
Fortune 500. Businesses choose
Delaware because we provide a complete package of incorporation
services including modern and flexible corporate
laws, our highly-respected Court
of Chancery, a business-friendly State
Government, and the customer service oriented Staff of
the Delaware Division of Corporations.”
- Delaware Division of Corporations |
Delaware has a rich history in the development of entity law
which has helped to entrench the state as a desirable locale
for business charters. There are many qualities that
attract clients to Delaware, including:
| 1. |
Asset
Protection
Delaware is considered to have among the most favorable "debtor friendly" laws
in the country.
Click
here for more information on asset protection afforded
by Delaware law. |
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| 2. |
Flexible Entitly
Laws
Delaware’s entity statutes
are purposely designed to provide extreme flexibility
in structuring business entities and allowing entity
owners to order their own affairs. Yet, the statutes also provide a
means to deal with practical problems involved with
business planning. For example, in response to
rising costs of directors’ liability insurance, Delaware
law allows shareholders to limit director liability
in the corporate charter itself.
Although a statute is easy to copy (as many states have tried to do), the case
law enhancing and interpreting such statutes cannot be duplicated. This
is why Delaware’s Court of Chancery is so unique and influential in entity law
matters (see below). |
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| 3. |
Court of Chancery
Delaware’s
Court of Chancery dates back to 1792. All
entity law issues that arise in Delaware are heard
in this separate court. The Court of Chancery
is ruled by judges only—no juries. These aspects
of Delaware’s entity judiciary are beneficial for many
reasons such as:
| (a) |
the judges’ opinions are usually written, and
therefore well-thought out and explained; |
| (b) |
the written opinions
provide clear precedence to attorneys and business-people,
which allows clients to anticipate results more readily
(and thereby often avoid litigation and the associated
expense!)—in other words, clients know the "ground
rules"; |
| (c) |
parties to a lawsuit avoid the possibility of
a "wild card jury"; and |
| (d) |
since the Court of Chancery is the only court
to hear entity cases, the judges on the Court of
Chancery have developed an expertise in entity
law matters. |
Further, most skilled business attorneys nationwide
have been trained as to aspects of Delaware law in addition
to the state in which he/she practices. |
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| 4. |
State Government
The
Delaware Legislature is certainly aware of the substantial
revenue that is generated by the hundreds of thousands
of entities formed under its laws. As
such, the Delaware Legislature tends to give entity
issues a high priority.
Delaware also runs a technologically-advanced
Secretary of State office, which allows for electronic
viewing of documents, e-filing, and online access to
forms, fee schedules, and basic entity information. |
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