WHY ARE SO MANY BUSINESSES INCORPORATED IN DELAWARE?

More than 80% of Fortune 500 companies are incorporated in Delaware, and for good reason. Delaware is widely regarded as having one of the most sophisticated and modern corporate statutes of any state, and it devotes significant time and effort to developing corporate expertise within its courts. Indeed, Delaware has a court system that focuses exclusively on corporate law issues, known as the Court of Chancery. The Court of Chancery is known for its ground-breaking decisions on corporate law matters, and its existence ensures that disputes among companies incorporated in Delaware are handled in a sophisticated and expedited fashion. Additionally, because of the Court of Chancery, Delaware has well-developed case law and precedent on corporate law issues, making it easier for a corporation to assess its likelihood of success on legal matters.

As a result of the consistency and expertise applied in Delaware courts, most types of investor prefer to invest in corporations that are incorporated in Delaware and can take advantage of the Court of Chancery and all of its benefits. Anyone from bankers to start-up investors may prefer that the corporation in which they invest is affiliated with Delaware. This makes the state an appealing one for new corporations looking for funding and financial support.


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