Business Law in Delaware

Business law in Delaware is structured so that Delaware is almost certainly the best place in the United States to incorporate.

Delaware: A Corporate Haven

Delaware cane into its own as a corporate haven when its laws started to give corporate management considerable latitude in terms of powers to operate and control the corporation. This latitude has tended to come at the expense of the shareholders' ability to control the corporation. As Delaware grew in popularity as a corporate home, it became known for the professionalism of its corporate governance lawyers and the courts familiarities with the intricacies of corporate governance.

Delaware Courts Extensive Experience With Corporate Governance Issues

Because of the extensive experience of the Delaware courts, Delaware has a better-developed body of corporate case law than other states, and this serves to give corporations and their legal retainers greater guidance and firmer precedents on matters of corporate governance and transaction liability issues.

The Delaware Court of Chancery

Disputes regarding the internal affairs of Delaware corporations will typically be filed in the Delaware Court of Chancery. This court is a separate court of equity (as compared to a court of law). Given that it is a court of equity, there aren't any juries, and the relevant judges, called chancellors, hear its cases. As of 2008, there is one Chancellor along with four Vice Chancellors in Delaware. The court is a trial court, and a chancellor hears each case. Litigants may also appeal final decisions of the Court of Chancery to the state's Supreme Court.

Incorporate In Delaware, Operate Elsewhere

In the United States, a corporation that operates in more than one state (or country) is considered a domestic corporation in the jurisdiction in which it incorporated In all other states where the corporation may operate it needs to file papers to be allowed to operate, as it is considered a foreign corporation, and the requirements for corporate governance in the case of a litigation use the law where the corporation is was incorporated.

This is especially important when someone wants to, with their lawsuit, "pierce the corporate veil" and thereby disregard the corporation's existence in order to have a go at the personal assets of the owners or directors of the corporation.

Therefore, a corporation formed in Delaware is subject to Delaware's laws regarding penetration of the corporate veil, regardless of where the corporation is formed. Delaware law is very friendly to owners and officers of corporations thus ensuring the state's status as corporate haven.

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