[poultron]

Most of you focused on iteration and entrepreneurship should appreciate Delaware simply for its incorporation status alone. Why does everyone incorporate in Delaware do you ask? Is it some tax break or something purely financial, as most people guess? Nope. It's because Delaware put a stake in the ground a LONG time ago and said that they want to be the experts at dealing with business law. So much so that they have their own special court system brought over from England called the Court of Chancery, which iterates its laws at a much faster pace than typical government to keep up with the current business environment. This court system is comprised of Chancellors and Justices who are known to be the best in the world at business law. And when you take a close look at who elects the Court's officials, its strictly divided into half Republicans and half Democrats, with mixed representation from legal and non-legal backgrounds, same with politics. It's about as unbiased as one can get. and from an experience perspective, the Chancellors and Justices ONLY focus on business law cases. Would you want your business case to be dealt with by a judge who just had a divorce case before yours and a criminal case after yours? I wouldnt either.

And from a development perspective, Delaware made their own Division of Corporations almost like a lean startup with the goal of making it the EASIEST and FASTEST way to incorporate your business, with their business hours being 24/7 with international support. You can literally incorporate your business in 15 minutes or less. Try doing that in your home state. Look into the history of the Division of Corporations and the Court of Chancery if you're interested, it's a fascinating story.

So at the end of the day, when you're incorporating a company and inspecting your fiduciary responsibilities to your future employees, shareholders, investors and customers... you want to make sure you incorporate wherever the Business laws are most up to date, with a fast process, a quick judicial system that plays the game by the books and will be swift and fair with a proven track record of extensive experience. Delaware has made itself the no-brainer solution to all of those problems.

And for that, we should thank them (regardless of how shitty their tolls are, ha).

[pjc50]

Efficient business law and registration is very important. It's practically the secret ingredient of the "Anglosphere". Similarly the UK and Ireland have a big advantage in ease of company registration compared to the average EU country. Estonia have made a deliberate effort to copy this.

The book The Other Path has a fantastic account of how improving business law was a key ingredient in stabilising Peru and defeating Shining Path. (Should be taken with a grain of salt, but it's a fantastic idea)

Note that this does not require it to be made anti-employee or anti-consumer! It just has to be clear, simple, effectively and fairly enforced.

[cryptonector]

This and trust, which... derives from good law and good courts.

Everywhere else in the world everything must be in triplicate at the very least.

[nitwit005]

While some like the local laws, CEOs have openly stated they've incorporated there for tax reasons, and there's research suggesting the tax benefits matter more than the legal benefits: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1737937

I'd also note they seem to have given in to some federal demands to make the incorporation rules stricter: https://www.marketwatch.com/story/delaware-backs-overhaul-of...

[joe_the_user]

Well,

That's certainly nice for corporations.

However, I would argue that situation runs directly against the broad tenants of American Democracy. Specifically, that states should regulate their internal commerce to some extent and the Federal government should regulate the rest. Here, you have one state that allows an end-run around both institutions (except for the minute number of people actually living in Delaware).

[lisper]

> tenants

Tenets.

> states should regulate their internal commerce

That idea was invented at a time when the fastest way to travel or communicate was by horse. In the age of the automobile, the airplane, and the internet, there is barely any such thing as "internal commerce" any more.

[brownbat]

I'd add that there are competing constitutional priorities, one of ensuring states can regulate their own affairs, and another of ensuring a common market, and ensuring that the legal frameworks of the various states are interlocking.

Balancing these two values is not trivial. Article 4 takes a shot, it's how we got here.

Odd to claim it's antithetical to American democracy. These sorts of compromises between union and independence, with all their odd imperfect results, are pretty thoroughly baked in.

[joe_the_user]

* In the age of the automobile, the airplane, and the internet, there is barely any such thing as "internal commerce" any more. *

In that case, the government elected by the population of all fifty states seems a more appropriate regulatory body than that elected by just one of the smallest state populations in the union.

[tzs]

> You can literally incorporate your business in 15 minutes or less. Try doing that in your home state.

According to https://corp.delaware.gov/faqs/, their expedited service offers 1 hour, 2 hour, same day, and next day service. I didn't see anything there about how long regular service takes, but according to lawyers who answered a question about this [1] on Quora, it is about a week. Is there some faster way to get service (I saw something about some third party incorporation services have direct update access to the database, so maybe they can do it faster than going through the government directly?)

My state, Washington, offers expedited service, which is two business days. You can get same day (usually less than an hour) if you file in person before 3:30 PM.

That said, I'm having a hard time thinking of a scenario where I'd be trying to form a corporation and want expedited service, let alone be willing to actually pay more for it [2]. What's the use case for this?

As far as where to incorporate goes, there are some good points for Delaware if you are going to do a large public company that operates in multiple state. If your company is going to a small private company doing business only in your home state, on the other hand, incorporating in your home state is often going to make more sense, at least if your state has reasonable corporate law, such as in states that use the Model Business Corporation Act.

Even big public companies sometimes find incorporating in their home state fine. Apple, for example, is a California corporation. Microsoft is a Washington corporation. Microsoft did change to Delaware in 1986, five years after initially incorporation in Washington, because Delaware was more liberal about allowing the company to indemnify officers, but Washington changed its laws on that point and Microsoft re-re-incorporated back to Washington in 1993. Overall, about 35% of the Fortune 500 are not incorporated in Delaware.

[1] https://www.quora.com/How-long-does-it-take-to-incorporate-a...

[2] OK...I can think of one situation. I used to work at a small Unix workstation maker called Callan Data Systems. Callan was founded and owned by three founders, who were all equal. I asked one of the others once how Callan's name ended up on the company if they all were equal.

The answer was that they had everything done to start the company except actually filing the papers, which they could not do because they could not agree on a name. This impasse went on for quite a while. During that time, the two other founders went away for a few days on a hunting trip. When they got back Dave told them he had incorporated using a temporary name so that actually get things going, and they could change the name later once they thought of a name. That temporary name was "Callan Data Systems".

They were never able to agree on a new name, and so it stayed Callan Data Systems until the end.

Perhaps expedited filing would be useful in that situation, so Dave could make sure they were incorporated before the others got back because if the filing has not yet been processed they may have been able to withdraw it, and they'd be right back where they were.

[matthewmcg]

The service times are maximum turn around times—sort of an SLA. In practice it’s often much faster.