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Risk Management Blog

UCC & Corporate Due Diligence

Resource Guide for Legal and Financial Professionals

Why Incorporate in Delaware?

Corporate, Tips

Most of us know that tons of businesses choose to file in Delaware, but what’s so great about the First State? More than half of the corporations that make up the Fortune 500 are incorporated in Delaware, and for good reason.

delawareThe easy answer to this question is that it doesn’t cost much to incorporate in Delaware compared to most other states; plus, if you don’t actually conduct business in Delaware you don’t have to pay corporate taxes, and you don’t even need to be a Delaware resident to incorporate in Delaware.

If you ask a lawyer, however, the first thing you might hear is that Delaware’s Court of Chancery is one of the most highly regarded in the country. Dating back to 1792, the Court of Chancery came to be the place where corporation law issues were concentrated, and therefore the Court developed an expertise in corporation law matters. This expertise brought more cases which, in turn, gave the Court more expertise. Additionally, the Delaware legislature gives high priority to corporation law matters.

delaware flagThe Delaware General Corporation Law itself is written with every effort to make drafting documents as simple as possible, and with a bias against regulation. When businesses were threatened to be deprived of able leaders due to high cost of liability insurance for directors and officers, Delaware led the way in permitting stockholders to limit the liability of directors by using appropriate verbiage in the charter document.

One of the big selling points of Delaware is that its law is studied and accepted as standard throughout the United States, so managers of Delaware corporations don’t have to look elsewhere for guidance in legal matters.

Those of us who work with Delaware on a daily basis know how easy the Secretary of State is to deal with, and is a modern, user-friendly office. Thanks to the second shift, documents can be filed until 11:59pm, and filings can be submitted on a wide array of expedites including 24-hour, same-day, 2-hour and even 1-hour. Online registered agents can view documents and obtain plain and certified copies, certificates of good standing, and UCC searches themselves on a same-day basis, as well as submit filings directly to the SOS.

This means that Delaware provides some of the best service in the United States, so when you add that to the benefits of simple corporate law and tax breaks, why wouldn’t you incorporate in Delaware?

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