Proof Delaware Is The Most Corporate-Friendly State

why Delaware is the incorporation capital

Delaware: King of Corporations

The Delaware Division of Corporations 2015 Annual Report has just been published and distributed by Rick Geisenberger, Chief Deputy Secretary of State and Director of Corporations.

Once again, Delaware’s dominance cannot be denied.

There is simply no better state in which to incorporate a company in the United States than Delaware. No matter what type of company you’re thinking about forming—corporation, Limited Liability Company or Limited Partnership—Delaware is by far the best state in which to incorporate!

Think we’re exaggerating? Check out this data:

  • More than 178,000 entities were formed in 2015, a five percent increase from the previous record of 169,000 entities in 2014.
  • 86% of all IPO’s in 2015 involved a Delaware General Corporation, such as Go Daddy, Shake Shack and Square.
  • 66% of all Fortune 500 companies were incorporated in Delaware, a 58% increase since 2000.

And check out this staggering statistic:

The total number of legal entities formed in Delaware increased to 1,181,000 in 2015, a 38% increase since 2008.

Let’s break it down by types of business entities, shall we? Here are the numbers of new business formations in 2015:

  • LLCs: 128,042 (up from 121,592 in 2014)
  • LPs: 10,746 (up from 9,721 in 2014)
  • Corporations: 38,288 (up from 36,445 in 2014)
  • Statutory Trusts: 1,645 (up from 1,208 in 2014)

That’s not all, folks.

The general fund revenue collected by the Delaware Division of Corporations in 2015 hit $1 billion for the first time. One. Billion. Dollars.

But wait…there’s more!

There were also several positive changes to Delaware Business Entity Laws, including:

  • Legislation that forbids Delaware corporations from requiring shareholders who unsuccessfully sue the corporation to pay the company’s legal fees.
  •  Exclusive forum clauses were approved, which let companies elect Delaware as the mandatory forum in which internal corporate lawsuits must be settled even if they are not Delaware companies.
  • The Delaware Rapid Arbitration Act gives companies around the world a “fast-track arbitration option to resolve business disputes.” The Delaware Rapid Arbitration Act puts time limits on any arbitration process so as to decrease both the time and money spent by Delaware companies on arbitration. It also proposes an opportunity for companies to avoid in-depth pre-hearing evidence in favor of a more time-efficient, less expensive solution to their disagreement.
  • An amendment to the Delaware Limited Liability Act was also approved. The amendment confirms that the “irrevocability of powers of attorney apply also to proxies.” The amendment also “confirms that the Delaware Secretary of State can issue public records in the form of photocopies or electronic image copies.”

Data doesn’t lie, ladies and gentlemen—Delaware is clearly the conquering hero of all the supposedly corporate-friendly states in the nation.


Source: Delaware Division of Corporations 2015 Annual Report.

*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.

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There is 1 comment left for Proof Delaware Is The Most Corporate-Friendly State

Ilya Zlatkin said: Wednesday, February 15, 2017

You're claiming that you have "Proof Delaware is the Most Corporate-Friendly State," and yet, absolutely nothing in this article proves that. Yes, it's the most popular. Yes, the State of Delaware gets a bunch of money from its business services. Neither of those is proof. When you finally get to the positive changes in Delaware corporate law, that's the closest you get to proof, but you don't compare or contrast those provisions with other states. Are there no other corporate-friendly states out there with analogous laws? Maybe those other states are actually more corporate-friendly, and the popularity of Delaware is just a byproduct of inertia from decades of indoctrination that "Delaware is most corporate-friendly?" I don't know the answers to those questions, but your post didn't help. The hyperbole and lack of substance was incredibly annoying.

HBS Staff replied: Wednesday, February 15, 2017

More than three-quarters of all IPO's in America were incorporated in Delaware. More than half of all Fortune 500 companies were incorporated in Delaware. The number of business entities formed in the state continues to increase. All of these stand-alone facts are, indeed, "proof" that no other state even comes close to incorporating as many companies as Delaware does. The blog was written--and is phrased accordingly--to serve as additional proof that Delaware is the best state in which to incorporate. It is a summary, essentially, of the Delaware Annual Report, as well as a continued conversation of the Delaware Advantage blogs we run on a regular basis (it's an entire category in our sidebar). For your edification, here is more information on why Delaware is considered (by lawyers, venture capitalists, entrepreneurs & CEOs) the best state in which to incorporate:


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