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Incorporation in Delaware

This chapter will examine why many companies choose Delaware as their state of incorporation and review central issues of the Delaware Corporation Law.

Background

The state of Delaware is known in the United States as one of the most attractive states for the purpose of incorporation. Since the Delaware General Corporation Law (DGCL) was enacted in 1899, the State of Delaware has offered a stable legislative framework that, on the one hand, allows broad flexibility and managerial discretion and, on the other hand, balances the interests of the various organs within the corporate world. The registration of corporations is performed by the Delaware Secretary of State automatically and quickly, with no bureaucratic delays. Business disputes are heard in Delaware in a special professional court (the Delaware Court of Chancery) that specializes in resolving complex business disputes without a jury. These principal considerations, in addition to further factors described below, are the reason that despite its small geographic size, Delaware has become the state in which most Fortune 500 corporations are incorporated, along with more than 50% of the companies listed for trade on the New York Stock Exchange (NYSE).


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