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As someone outside of the US, could you quickly explain to me this "Delaware thing"?
by 9ec4c12949a4f3 16y ago
As someone outside of the US, could you quickly explain to me this "Delaware thing"?
- wdaher 16y agoBasically, when you start a company, you choose to start it (to incorporate it) in a particular state. Each state has its own laws about corporations, what they are and aren't allowed to do, etc. Some states have laws that are really company-friendly, and other states have laws that are really shareholder-friendly. Delaware's laws are, in general, quite company-friendly -- so when you're starting your company, it makes a lot of sense to do so there (because your company will get the most legal protection). In addition, "basically everyone else does it". Which isn't good motivation for jumping off a bridge, but it is a good motivation here, and here's why: case law. Lots of companies (and thus lots of Delaware companies) have done crazy things and have had lawsuits over them. So it's better-understood how to interpret portions of Delaware corporate law, because they've been tested before in court. Whereas in some other random state, that's less likely to be the case. As a consequence, I think basically every corporate lawyer in the US is familiar with both their own state's corporate law, as well as Delaware's. And finally, a disclaimer: I'm not intimately familiar with the corporate law of even just one state, let alone all 50, so take this with a grain of salt -- but this is a sketch of the motivations for incorporating in Delaware that I've heard.
- 9ec4c12949a4f3 16y agoWow, you've made me want to move! Hah.